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Oracle is underwater on its $300B OpenAI deal

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Re: Oracle is underwater on its $300B OpenAI deal

#141

Post by jMyles »

There has never been a moment that I've truly understood how Oracle stays in business.

I snuck into "Oracle Openworld" in 2011, and it was just the most drunken, debaucherous event. I had just come from Djangocon in Portland, and the contrast was incredible - Djangocon which was _much_ more chill, focused on collaboration - more full of weed, whereas the Oracle thing was liquor and cocaine, and I had the distinct feeling that few people there were mulling over any product notions whatsoever.

Is it just legacy db support? Can that really explain this? They have window shopped acquisitions for a decade now - do they have a stack which new customers are approaching with serious esteem, and I just haven't heard about it?

Re: Oracle is underwater on its $300B OpenAI deal

#142

Post by DiabloD3 »

mschuster91 wrote: post #122
mgh95 wrote: post #111

Earlier quoted context omitted.

The market is pricing in significant counterparty risk. It's possible Oracle does the buying, unpacking, and cooling of Nvidia servers and doesn't get paid.

> It's possible Oracle does the buying, unpacking, and cooling of Nvidia servers and doesn't get paid. The beauty of being a cloud infra provider is you're selling shovels. OpenAI going bust? Doesn't matter too much for Oracle, there will always be someone willing to pay them for GPU compute capacity. Even if the hype behind AI dies down, which I hope it does rather sooner than later, the fundamental aspects aren't v…

Problem is, those Nvidia servers are useless to anyone who needs servers already racked in a datacenter. They're purposely made purely to run LLMs, and anything else would be a waste of time.

Nvidia is also fucking over anyone who buy these: datacenters depend on used hardware sales to recoup cost, sometimes getting up to half of what they originally paid for the hardware.... this hardware has no resale value.

It's literally garbage the moment it leaves the factory.

Re: Oracle is underwater on its $300B OpenAI deal

#143

Post by etempleton »

beachy wrote: post #62
Bricejm wrote: post #22

Earlier quoted context omitted.

Google also has $100 billion in profit each year from it's core business to wait out OpenAI.

Google is also conflicted though. The more they emulate ChatGPT's clean UI, the more they are failing to push ads in people's faces, which is what generates that $100B for them. Their business model fails if their users don't experience a confusing crap-fest of ads.

If ads are the future of revenue for AI then every AI company is in trouble, because ads won’t even come close to covering the costs.

Re: Oracle is underwater on its $300B OpenAI deal

#144

Post by mgh95 »

gunalx wrote: post #133
mgh95 wrote: post #130

Earlier quoted context omitted.

> AI, even the relatively lackluster state we have today, has a ton of very useful usage cases that are actually working in the field. Useful use cases at what price ? It's totally possible that after VC money dries up the price increases far beyond what customers (both business and consumer) have been paying, resulting in demand destruction rendering the investment a net negative for Oracle.

Not nessesarily. We have providers of hosted oss models (even large sota ones), with competitive API pricing. They have no reason to subsidice their services, outside og initial market grab. But there is so many of them that it dosent look to bad. Also buisnisses have invested to host things locally themselves as well.

> Not nessesarily. We have providers of hosted oss models (even large sota ones), with competitive API pricing. They have no reason to subsidice their services, outside og initial market grab. But there is so many of them that it dosent look to bad.

That price is holding at the current demand ratio of GPU availability/consumption. If the large companies such as OpenAI and Anthropic cease training new models and accepting loss-leader lines of business such as free consumer inference there is a reasonable chance of a GPU glut. This GPU glut may drive down prices Oracle can command for their cloud services.

The fundamental problem is not the market as it stands today. The problem is where will the market equilibrium shift from increased capacity and reduced demand due to VC subsidy reduction.

Re: Oracle is underwater on its $300B OpenAI deal

#145

Post by Spooky23 »

NuclearPM wrote: post #124
Spooky23 wrote: post #117

Earlier quoted context omitted.

The market is priced for perfection. Delivery is underwhelming. I think the audacity and hijinks of Altman, Musk, the Trump whack pack, Theil, etc in this zero regulatory environment is starting to wear thin on Wall St. The honest players like NVidia, Micron, Microsoft, Meta and Google who are shipping product or making money with this tech. IMO there’s a non-zero probability that OpenAI and the “Elon cinematic unive…

Why do people say “non-zero probability” instead of “chance” or “possibility”?

I say it when I really don’t have an opinion about the likelihood and don’t want to choose a word that infers high/low.

Re: Oracle is underwater on its $300B OpenAI deal

#146

Post by lateforwork »

Yossarrian22 wrote: post #120
lateforwork wrote: post #46

Earlier quoted context omitted.

What is the cost of delivering regular search results vs. answering an AI chat question? How do you sell ads through each of these channels? If you consider those angles you'll see that Google does not want AI chat to replace Google search any time soon. Google is being dragged into this kicking and screaming. They are damned if they do, and damned if they don't.

It’s interesting, it’s almost like if Kodak did end up making best in class digital cameras

No, it is harder. Google doesn't just have to make the best AI chat, they also have to figure out how to make profit from it. That's something no one has figured out yet. Open AI can make a loss every year, but if Google makes a loss the stock is going to tank.

Re: Oracle is underwater on its $300B OpenAI deal

#147

Post by eska »

DiabloD3 wrote: post #142
mschuster91 wrote: post #122

Earlier quoted context omitted.

> It's possible Oracle does the buying, unpacking, and cooling of Nvidia servers and doesn't get paid. The beauty of being a cloud infra provider is you're selling shovels. OpenAI going bust? Doesn't matter too much for Oracle, there will always be someone willing to pay them for GPU compute capacity. Even if the hype behind AI dies down, which I hope it does rather sooner than later, the fundamental aspects aren't v…

Problem is, those Nvidia servers are useless to anyone who needs servers already racked in a datacenter. They're purposely made purely to run LLMs, and anything else would be a waste of time. Nvidia is also fucking over anyone who buy these: datacenters depend on used hardware sales to recoup cost, sometimes getting up to half of what they originally paid for the hardware.... this hardware has no resale value. It's l…

2026 is the year of Google Stadia /s

Re: Oracle is underwater on its $300B OpenAI deal

#149

Post by arresin »

chrisgd wrote: post #45

The market (over)reacted to the OpenAi announcement sending Oracle’s share price up and now may be overreacting to Altman’s interview with an investor pushing their stock price down. And we are measuring (what seems like) a non-binding investment against market cap which swings everyday.

Do you mean the bg2 pod interview?

Re: Oracle is underwater on its $300B OpenAI deal

#150

Post by onesociety2022 »

jMyles wrote: post #141

There has never been a moment that I've truly understood how Oracle stays in business. I snuck into "Oracle Openworld" in 2011, and it was just the most drunken, debaucherous event. I had just come from Djangocon in Portland, and the contrast was incredible - Djangocon which was _much_ more chill, focused on collaboration - more full of weed, whereas the Oracle thing was liquor and cocaine, and I had the distinct fee…

Tiktok, Zoom and Uber use Oracle Cloud.
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