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S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

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Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#41

Post by nradov »

hobonation wrote: post #4

Is it me or do none of the AI companies have a "moat" in the Ben Grahmm sense. I use their services, but I frankly don't care who provides it. I'll chase the chepest/best and have no issue switching from one to another. The only moat I can see is Microsoft providing its services to companies in its Azure system. Nervous IT departments probably like that it's not leaving their control if Bob in the SAP team spins up s…

The moat is shifting from technology to access to proprietary training data. It doesn't matter how good your LLM platform is if you don't have good data to feed the training run. Public Internet data and published media is already mined out. Now the frontier LLM vendors have shifted to licensing proprietary data that's locked up behind corporate firewalls, and even hiring human domain experts specifically to create new training content in target verticals. You'll see the effects of this next year, although it might not be obvious to those who mostly only use LLMs for coding tasks in popular programming languages for which there was already a lot of training data.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#42

Post by pocksuppet »

cmiles8 wrote: post #31

Market signals on an impending AI bust are broader than just Oracle’s woes. For example, Amazon just had a challenging bond offering where the market is clearly starting to seriously question the ROI on all this money being pumped into AI buildout. That does not bode well at all for AI-only companies without broader cash flow from other businesses. And when the cash dries up this whole thing comes crashing down like…

IMHO these signals have more to do with the market than AI. They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining to be invested.

Managing the total amount of money so that investment bubbles peter out before they get excessively big is supposed to be the central bank's job.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#43

Post by jimbokun »

wmf wrote: post #17
unreal6 wrote: post #14

Earlier quoted context omitted.

Is Bedrock a "middleman?" I believe that they run all inference inside of AWS data centers, on their own infrastructure. Their new endpoint even promises zero operator access [0] [0] https://aws.amazon.com/blogs/machine-learning/exploring-the-...

Weights are worth far more than data centers.

Why?

Seems like open weight models keep catching up to state of the art within a few months, at most. Doesn’t seem like much of a moat to me.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#44

Post by hobonation »

esikich wrote: post #25
rawgabbit wrote: post #9

Earlier quoted context omitted.

Uhh. I actively and vocally avoid all things Microsoft. I see Microsoft and I immediately think buggy software with zero security.

That's fine, but your inexperience with large companies that are MS's bread and butter doesn't really give you any credibility here. It's the standard for a reason.

Can concur. I hate them with a passion, but corps love them, and I hate to say it... with good reason.

They're the only player in the Identity-Document-Email-VM-Storage space that's even remotely unified.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#45

Post by darkwi11ow »

therobots927 wrote: post #23

This is surprising to me. Judging by what appears to be the common sentiment here on HN - which is that AI inference is already profitable, and OpenAI is fairly valued by private markets. Given that Oracle and Microsoft are major counterparties of OpenAI, it seems odd that their stocks have been performing so poorly recently. Can anyone square this circle for me?

Inference might be profitable, but it does not mean the profits of AI datacenters will rise in future. Open weight models and local AI already put the pressure on the AI datacenter profit margins, and local AI is set to become much more efficient in the future.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#46

Post by cmiles8 »

therobots927 wrote: post #23

This is surprising to me. Judging by what appears to be the common sentiment here on HN - which is that AI inference is already profitable, and OpenAI is fairly valued by private markets. Given that Oracle and Microsoft are major counterparties of OpenAI, it seems odd that their stocks have been performing so poorly recently. Can anyone square this circle for me?

The general fallacy of the “but inference is profitable” argument is that it tends to ignore all the costs of building and training the model. Given the fact that 1) that’s not trivial, and 2) the arms race underway means one can’t stop training, then it ruins the financial picture.

It’s like saying a new apartment building is “profitable” because the monthly income covers the monthly running costs, but ignoring the giant mortgage that covers the cost of building the building. That thinking is a good way to go bankrupt in real estate and a good way to go bankrupt in AI.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#47

Post by lbrito »

therobots927 wrote: post #23

This is surprising to me. Judging by what appears to be the common sentiment here on HN - which is that AI inference is already profitable, and OpenAI is fairly valued by private markets. Given that Oracle and Microsoft are major counterparties of OpenAI, it seems odd that their stocks have been performing so poorly recently. Can anyone square this circle for me?

I think those are just the loud minority. I wouldn't be surprised if they're like 20-30% if a poll were made here

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#48

Post by pocksuppet »

HDThoreaun wrote: post #39
FuriouslyAdrift wrote: post #28

Earlier quoted context omitted.

AMD Instinct is their direct competitor for compute and they are better per dollar, better per watt, and out competing on raw performance. Only thing holding them back is fab capacity which nVidia keeps buying in bulk to keep them small.

AMD is held back by their interconnect and firmware disadvantage compared to nvidia. They’ve been trying really hard to create their own cuda, but rocM and HIP still aren’t very popular especially for research.

And their repeated refusal to either implement CUDA or reimplement everyone's CUDA libraries on their own platform. They say that AMD never misses a chance to miss a chance.

Re: S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-

#50

Post by twoodfin »

therobots927 wrote: post #23

This is surprising to me. Judging by what appears to be the common sentiment here on HN - which is that AI inference is already profitable, and OpenAI is fairly valued by private markets. Given that Oracle and Microsoft are major counterparties of OpenAI, it seems odd that their stocks have been performing so poorly recently. Can anyone square this circle for me?

Good question.

Given what happened with xAI’s excess capacity lease to Anthropic, and Meta’s noises about doing the same, seems likely that the demand for inference will continue to slope upwards for a while. If I’m Oracle, I’m not worried about being able to utilize the data centers I’ve built for some price, almost certainly a profitable one.

I’m guessing, though, that Oracle made their capital investments on assumptions of a higher price & return. Possibly because it wasn’t clear when these decisions were made how much competition OpenAI would have at the frontier.

I don’t think this math is all that hard. Capital markets have everything they need to start to figure it out, most especially a year or two of history to project forward.

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