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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-

#161

Post by dragonwriter »

Ancalagon wrote: post #89
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…

And none of the major model makers (not counting SpaceX) have IPO'd yet

Pretty sure Google fits any definition of major model maker that SpaceX does, and had their IPO long before SpaceX.

Meta and Microsoft both are also significant makers of GenAI models that are public, though neither has a big tentpole LLM line that they sell access.to commercially like OpenAI, Anthropic. Google, SpaceX, which I infer might be what you mean by major model maker.

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

#162

Post by fny »

someuser54541 wrote: post #146
cmiles8 wrote: post #136

Earlier quoted context omitted.

Stay well diversified, keep investing each month, and take a nap. There are almost surely severe bumps ahead for the AI space and that will likely spill over into the broader market. But unless you’re retiring in the next few years don’t worry about it. You can’t time the ups and downs and the only proven strategy is to just keep investing in a broad indexed portfolio and just ride out. You’ll take a short term hit b…

I suppose I'm just a little worried about a 10 year sideways market. The run-up has been absolutely insane the past year...some graphs are just a literal straight line up. I didn't get to participate in much of that and concerned the prevailing wisdom on these larger timescales may no longer hold true.

If you didn't participate in it, what are you hedging?

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

#163

Post by csoups14 »

ericmay wrote: post #97
lelanthran wrote: post #57

Earlier quoted context omitted.

> 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. What ROI? There was no return, and there currently isn't any return on investment, because those companies did not exit yet! The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing.

> The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing. I keep seeing these unsubstantiated claims. They’re out to get us and just pump and dump on public markets! Yet, before they IPO they have to go around and do what? Who sets the IPO price? Who buys the shares? If the shares tank, the valuation of the company goes down a…

> If individual investors are buying shares and getting blown up, that’s their problem. Invest and due your own research.

This is simply absurd. Of the investment banks that helped SpaceX IPO, Goldman Sachs has their price target at $205 (139x implied price to sales), JP Morgan at $225 (152x implied P/S), Deutsche Bank at $255 (173x implied P/S), Morgan Stanley at $300 (203x implied P/S), and Raymond James at $800 (542x implied P/S). It's the 1920s all over again; publicly pump and privately sell into the demand you're creating. I'm guessing you're perfectly fine with this behavior from the largest market participants?

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

#164

Post by dragonwriter »

xienze wrote: post #143
semiquaver wrote: post #135

Earlier quoted context omitted.

Nothing says “full of shit” like someone saying “market is signaling an impending X”. Why not make a huge levered bet and get wildly rich if you think so?

Knowing "what" will happen is different from knowing "when" it will happen.

Also, even knowing both what will happen and when is a separate thing from having access to capital. You can't really tell that someone posting that hasn't already also taken the biggest leveraged position they can (unless that person is so rich that doing so would itself visibly move the market, which most people who might post comments are not.)

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

#165

Post by tmp10423288442 »

Zsfe510asG wrote: post #20

There is AI data center overcapacity already. The KOSPI crashed last week, and it's a leading indicator for the cyclical hardware industry. It already had been that indicator in the 2000 bubble. I don't know what possessed Ellison to ruin a functioning company, but it will be interesting if he gets a margin call for ORCL's other debt exposures, which are Ellison's massive loans against his ORCL stock.

The KOSPI went up already 125% in the past year, so some sort of correction was inevitable, even if the underlying companies are healthy. The crash has been exacerbated by South Koreans levering up heavily in the past few months and now getting wiped out.

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

#166

Post by xboxnolifes »

echelon wrote: post #147
lelanthran wrote: post #88

Earlier quoted context omitted.

> Market signals on an impending AI bust are broader than just Oracle’s woes. It's worse than that - I believe that Oracle is one of the (many) companies right now that, if their AI experimentation fails, will stop the music, and everyone will be running for a chair. Oracle is one of a few foundational components in the circular-investing group of AI companies. If they fail to make their commitments they're the first…

Everyone in the tech and media world is dead set on this being a bubble. Yet, even now, Fable is able to do the work of 4-5 engineers when used by a single senior engineer. Teams can and will shrink. Look at all the production and advertising companies switching over to Seedance. I know ad firms bidding 1/4th their typical contract price (pharma, P&G, etc.) and winning contract after contract. This isn't dotcom "dark…

A financial bubble has almost nothing to do with how good the product is. It's about how much of the value the company can capture, and what the ratio of that capture is compared to the investment.

It doesn't matter to investors if OpenAI or Anthropic can build AGI if a year later 10 competitors have similar models and eat into the revenue. OpenAI and Anthropic needs years, if not decades, of significant market dominance, post-enshitification, to justify their investment spend.

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

#167

Post by alephnerd »

ethbr1 wrote: post #145
alephnerd wrote: post #106

Earlier quoted context omitted.

> I can't name a single thing running on Oracle Cloud CrowdStrike and Uber > Hetzner I don't know of any upper market EMEA customers on Hetzner. I've met Scaleway, OVHCloud, and even STACKIT users but never Hetzner.

I think the market for Oracle Cloud is the same for early GCP: companies with large enough needs and strong enough engineering teams that they can leverage "X runs on Oracle Cloud" into deep discounts. And then cover the gaps with engineering.

Partially. It's basically only enterprise and upper market organizations that were hit by billing re-negotiations by AWS, GCP, or Azure and want a high touch experience.

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

#168

Post by glaslong »

someuser54541 wrote: post #117
lelanthran wrote: post #88

Earlier quoted context omitted.

> Market signals on an impending AI bust are broader than just Oracle’s woes. It's worse than that - I believe that Oracle is one of the (many) companies right now that, if their AI experimentation fails, will stop the music, and everyone will be running for a chair. Oracle is one of a few foundational components in the circular-investing group of AI companies. If they fail to make their commitments they're the first…

What's the best way to hedge against this, considering many of us have significant savings in the market? A few puts on SPY dated a year or two out?

Bet on Chinese tech sector to eat everyone's lunch with cheaper, faster, smaller, open-weight models?

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

#170

Post by lelanthran »

ericmay wrote: post #142
lelanthran wrote: post #109

Earlier quoted context omitted.

My point was that there is no ROI until the investors exit! IMO, those shares are overpriced even at private investment levels, but my opinion is still irrelevant to the fact that there is no ROI until the investors exit!

And when do those investors exit? Nobody forces you or any other individual investor to buy shares in their “pump-and-dump company” when it lists.

> And when do those investors exit?

Who knows? Who cares? My point is that until those investors exit, there is no ROI.

The comment I originally responded to was talking about investors getting ROI from AI companies. I'm pointing out that no such thing will happen until the investors exit.

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