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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

#61

Post by consumer451 »

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.

Reading the replies, my next question is: How much of say, CALPERS [0], is invested in "AGI by next 2030" or similar. If it's far less than 1%, that seems like a fair bet. Does anyone have a good read on the real number?

[0] https://www.calpers.ca.gov/

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

#62

Post by Fade_Dance »

master_crab wrote: post #54
Fade_Dance wrote: post #9

Earlier quoted context omitted.

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)?

This seems to be a widespread practice lately, so there must be something going on here. Aside from the balance sheet/accounting angle...

Maybe they don't want to securitize their core assets and introduce a new favored class of investor. Ex: If they are securitizing their AI data centers as part of the initial capital raise, those investors would be higher up the capital stack. They would get the datacenter in a theoretical bankruptcy before the bond/equity holders got their cut of the liquidation. Intel securitized their new fab builds with Brookfield and Apollo and, as a shareholder at the time, it didn't feel great. No idea what the precedent is regarding Meta by the way, just a thought.

Maybe they think that the lenders are a bit "overzealous", and they want to push the risk of things like write down on GPU racks entirely onto external parties who are apparently all too happy to take the risk.

I'm guessing it's a mix of both, combined with the fact that we're seeing some copy and paste thinking. This is proving to be a way to get fast access to the huge private credit market. I would assume there must be some very wide deal flow pipes cranking currently, so why not tap into them if the demand is there in the other end.

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

#63

Post by consumer451 »

dmoy wrote: post #46
FanaHOVA wrote: post #43

Earlier quoted context omitted.

You really think the amount of savings in 401ks is the same size as the GDP of the whole country?

It's not, but IRA plus 401k is about equal to GDP, yes (and if you add approximately equivalent defined contribution plans like 403b, tsp, etc, then it's more than GDP)

> It's not, but IRA plus 401k is about equal to GDP

The economic vampires must salivate about this opportunity all night and day.

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

#64

Post by Forgeties79 »

prepend wrote: post #13
Ekaros wrote: post #6

Debt financed. Who is loaning money to these things? I feel there must be an other level of bubble there...

Seems like a stable investment with returns locked in through 2049 unless Facebook defaults.

Maybe I’m off the mark here but considering the state Facebook was in until AI put some wind back in its sales I would not say 20 years is a safe bet.

Remember how much time and money they burned on Metaverse? They’ve got nothing to show for it. And wasn’t only like 1-2 years ago they stopped publishing DAU’s in favor of a more favorable metric?

Someone feel free to correct me but they seemed to be just dipping their toes into a bit of a house of cards situation just a couple of years ago.

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

#65

Post by rsynnott »

pcurve wrote: post #7

This article doesn't mention it, but PIMCO is lead lender "Pacific Investment Management Co. (PIMCO) is the anchor lender on the deal. The debt, which matures in 2049, is fully amortising and has been rated A+ by S&P. The bonds were priced at around 225 basis points over U.S. Treasuries." https://pe-insights.com/blue-owl-and-meta-close-record-30bn-... Oof.. I don't know about this one.

Oh, we're doing this again, are we?

Ugh. A year ago, I was (a) fairly confident that the AI bubble would burst, but (b) fairly confident that contagion would be limited; a bunch of startups would evaporate, and some VCs would be badly burned or fail, but the broader economy would largely shrug and carry on.

Based on this sort of thing, I'm not sure I still believe (b).

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

#66

Post by rsynnott »

FanaHOVA wrote: post #43
googlywoogly wrote: post #39

Earlier quoted context omitted.

The exact value of all 401k isn't really known, but the average account value is estimated at ~135k, if (let's say) 200 million Americans have a 401k, that comes out to 27 trillion.

You really think the amount of savings in 401ks is the same size as the GDP of the whole country?

Why shouldn't it be? GDP is _economic production (for some value of economic production) for a year_. It's not all that closely linked to wealth.

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

#67

Post by pcurve »

rsynnott wrote: post #65
pcurve wrote: post #7

This article doesn't mention it, but PIMCO is lead lender "Pacific Investment Management Co. (PIMCO) is the anchor lender on the deal. The debt, which matures in 2049, is fully amortising and has been rated A+ by S&P. The bonds were priced at around 225 basis points over U.S. Treasuries." https://pe-insights.com/blue-owl-and-meta-close-record-30bn-... Oof.. I don't know about this one.

Oh, we're doing this again, are we? Ugh. A year ago, I was (a) fairly confident that the AI bubble would burst, but (b) fairly confident that contagion would be limited; a bunch of startups would evaporate, and some VCs would be badly burned or fail, but the broader economy would largely shrug and carry on. Based on this sort of thing, I'm not sure I still believe (b).

What I find fascinating is, everyone is making the same exact points:

1. Yes, there is a bubble, but it's not the same. Companies are profitable.

2. It may burst, but this may go on for another 2+ years. No one knows.

3. Even after the burst, we would have valuable AI infrastructure, just like all the excess internet capacities after the Dotcom.

Base on this, I think the bubble will burst sooner. Sentiment can shift real quick.

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

#68

Post by victorbjorklund »

googlywoogly wrote: post #39
victorbjorklund wrote: post #34

Earlier quoted context omitted.

Wouldnt that be pocket change?

The exact value of all 401k isn't really known, but the average account value is estimated at ~135k, if (let's say) 200 million Americans have a 401k, that comes out to 27 trillion.

Yeah, but I don't think anybody is expecting every single American to take out 100% of their savings from the stock market and put them in private equity.

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

#69

Post by erichocean »

mlnj wrote: post #28
erichocean wrote: post #18

Earlier quoted context omitted.

I don't know about AGI, but AI employees replacing human labor is well within range today.

Excel sheets have replaced many humans too. Pretty low bar for AGI if you'd ask me.

Not replaced, made more efficient—the "replacement" is indirect.

Actual replacement involves no human in the loop, an entire firm that is 100% AI labor is possible.

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