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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-

#61

Post by twoodfin »

jimbokun wrote: post #43
wmf wrote: post #17

Earlier quoted context omitted.

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.

If/when open-weight models do catch up (i.e. become the dominant product in demand), Amazon transitions from a middle-man to the supplier with the best economies of scale.

Great business either way. You could even draw an analogy to Linux/OSS & the origins of AWS. They started as basically an infra middle-man for other people’s technology. But as the core tech commoditized, they transitioned into selling their own higher level services at scale—like Bedrock.

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

#63

Post by lelanthran »

dj_axl wrote: post #5
mjcl wrote: post #3

Earlier quoted context omitted.

They can sell the software business to broadcom.

They can rent out their AI infra to The Hyperscalers.

> They can rent out their AI infra to The Hyperscalers.

I can't tell if this is supposed to be sarcasm or not :-/

Aren't all the token providers right now over-provisioned? They aren't trying to use up all their capacity, they're selling it to one another.

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

#64

Post by solatic »

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…

AWS and Google at least own their own hardware (Trainium and TPUs, respectively). It's a moat in the sense that designing, building, and deploying your own chips at scale is quite a feat and not easily replicated. The vertical integration will allow them to continue to be profitable once the models get good enough and competitors' prices race to the bottom. Google has Gemini; AWS may not deploy its own models (yet?), but that's not necessarily a losing position, as long as the market is able to run models sourced elsewhere on Trainium and the price is right.

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

#65

Post by [deleted] »

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?

[deleted]

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

#66

Post by an0malous »

cmiles8 wrote: post #46
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…

> 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.

Or that it’s all hearsay and no one has released financials yet?

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

#67

Post by AlexandrB »

therobots927 wrote: post #32
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.

Well it seems like he bought the “AGI is 2 years away” line. As did… pretty much everyone in Silicon Valley.

The ability of Silicon Valley to hype itself up into a frenzy is unparalleled. Apparently nothing was learned from "blockchain for everything" and "we're going to live in the metaverse".

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

#68

Post by csomar »

LaurensBER wrote: post #38
chasil wrote: post #26

And they terminated 30k employees to achieve this? https://www.forbes.com/sites/jonmarkman/2026/04/06/oracles-m...

When we tried to do a pilot with their cloud we couldn't even sign-up. None of the corporate credit cards were accepted. In addition to that the form basically only worked in Edge. We emailed support, they changed something on the backend. It still did not work. We gave up. In retrospective that was a very clear warning sign that their priorities were misguided. I'm glad we did not waste any further time and effort o…

Good to know it's not only problematic on the free tier. I wanted to sign up to get the free credits but couldn't finish the setup. I tried again now and it accepted/charged my card ($1 verification test) but then after the account was created it said I need a credit card?

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

#69

Post by qeternity »

pocksuppet wrote: post #42
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.

> is supposed to be the central bank's job.

What? No it's not, and never has been.

Without even getting into the practical vs. theoretical of Fed dual mandate (funding deficits), even the most uncharitable take on modern CBs wouldn't suggest this.

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

#70

Post by voidfunc »

measurablefunc wrote: post #2

What happens when Oracle can't pay the interest on their loans?

Their competitors eat them. I would not be surprised to see Oracle's cloud business get absorbed by IBM or Microsoft. Maybe Amazon. The extra DC capacity is valuable to a couple companies right now.
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