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Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

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Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#51

Post by halayli »

jstanley wrote: post #32
halayli wrote: post #31

Earlier quoted context omitted.

if you have $100M and you need a $1M, you'd use your credit line and borrow $1M and pay it back from interests coming from $100M. it's not that different in corp.

That doesn't make any sense. You'll be paying a higher rate of interest on your loan than you're receiving on your cash. You'd be better off taking the $1m directly out of your cash pile.

You need to consider secured line of credit vs unsecured and the interest rate is significantly different as one is backed by collateral and the other is not.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#53

Post by Ekaros »

consumer451 wrote: post #49
lazide wrote: post #11

Earlier quoted context omitted.

Pimco - the company that originated all those bonds every pension fund is sitting on.

I am 99.0% percent sure that the AI bubble burst is coming. I was only 95% sure until very recently. Does this mean that this investment spreads the bubble burst risk into people's pension funds? (those lucky enough to have such a thing) Or, not necessarily?

I would think so. I don't think pension funds are always exactly smart money. They have lot of pressure to make numbers work so they are after anything that sounds reasonably like it will make them work. And that can work until it does not.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#54

Post by master_crab »

Fade_Dance wrote: post #9
master_crab wrote: post #2

Would love to see the business plan that convinced Blue Owl to sink that much money. Or maybe they’re ok with the collateral on offer.

The way the recent deals have been structured is that the capacity and thus revenue is pre-booked, which upgrades the credit quality in the eyes of the lenders. Blue Owl is private equity, so they are likely loading the special purpose vehicle itself with the debt (in a way that it off Meta's balance sheet, which is the primary objective), and then possibly funding the capital outlay through secondary markets (if not…

This makes a lot of sense.

But the one thing that doesn’t compute is the commitment. There is a long term obligation now incurred by meta to use this infrastructure. If it’s a capital lease I assume this is now a liability on their books (and disclosures)?

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#55

Post by consumer451 »

onlyrealcuzzo wrote: post #26
consumer451 wrote: post #20

Earlier quoted context omitted.

Isn't the first rule of business that you spend other people's money, whenever possible?

Another #1 is to get a good return on your money. But tech companies horde cash because they don't have anywhere they see as a good investment. You'd think investing in their own data centers would get a better return than cash. Kind of makes you wonder why everyone is so eager to fund these projects for them.

Good points, but after processing other replies in this post, I would change the last sentence to:

Is Meta so unsure about this investment, that they decided to spread the risk and profit to other parties, even though they could fund it themselves?

(AI bubble death knell ?)

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#56

Post by consumer451 »

nextworddev wrote: post #27
onlyrealcuzzo wrote: post #26

Earlier quoted context omitted.

Another #1 is to get a good return on your money. But tech companies horde cash because they don't have anywhere they see as a good investment. You'd think investing in their own data centers would get a better return than cash. Kind of makes you wonder why everyone is so eager to fund these projects for them.

Because that’s the only place with growth

Sometimes the simplest point makes the most sense about a complex topic.

Kudos for being very succinct. I believe the youths would have just replied: "this." :~>

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#57

Post by lazide »

Ekaros wrote: post #53
consumer451 wrote: post #49

Earlier quoted context omitted.

I am 99.0% percent sure that the AI bubble burst is coming. I was only 95% sure until very recently. Does this mean that this investment spreads the bubble burst risk into people's pension funds? (those lucky enough to have such a thing) Or, not necessarily?

I would think so. I don't think pension funds are always exactly smart money. They have lot of pressure to make numbers work so they are after anything that sounds reasonably like it will make them work. And that can work until it does not.

Pension funds, banks, etc, are never smart money. They aren’t allowed to be.

They are required to pick based on some defined formula which the various stakeholders signed off on, and hence are prime juicy targets for people trying to game systems.

They also took the ‘08 mortgage crisis right in the shorts, for the same reasons.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#58

Post by andrewinardeer »

consumer451 wrote: post #49
lazide wrote: post #11

Earlier quoted context omitted.

Pimco - the company that originated all those bonds every pension fund is sitting on.

I am 99.0% percent sure that the AI bubble burst is coming. I was only 95% sure until very recently. Does this mean that this investment spreads the bubble burst risk into people's pension funds? (those lucky enough to have such a thing) Or, not necessarily?

Knowing that an AI bubble bust is coming is not magic.

Knowing when it will burst is.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#59

Post by nradov »

lazide wrote: post #57
Ekaros wrote: post #53

Earlier quoted context omitted.

I would think so. I don't think pension funds are always exactly smart money. They have lot of pressure to make numbers work so they are after anything that sounds reasonably like it will make them work. And that can work until it does not.

Pension funds, banks, etc, are never smart money. They aren’t allowed to be. They are required to pick based on some defined formula which the various stakeholders signed off on, and hence are prime juicy targets for people trying to game systems. They also took the ‘08 mortgage crisis right in the shorts, for the same reasons.

This is why all defined benefit pension funds should be eliminated and replaced with defined contribution plans. Pensions are far too systemically risky for employees, employers, and taxpayers alike. The only one who really benefits are the fund managers who get to collect large fees.

Re: Meta convinces Blue Owl to cut $30B check for its Hyperion AI super cluster

#60

Post by lazide »

nradov wrote: post #59
lazide wrote: post #57

Earlier quoted context omitted.

Pension funds, banks, etc, are never smart money. They aren’t allowed to be. They are required to pick based on some defined formula which the various stakeholders signed off on, and hence are prime juicy targets for people trying to game systems. They also took the ‘08 mortgage crisis right in the shorts, for the same reasons.

This is why all defined benefit pension funds should be eliminated and replaced with defined contribution plans. Pensions are far too systemically risky for employees, employers, and taxpayers alike. The only one who really benefits are the fund managers who get to collect large fees.

And banks?
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