This slide from their investor preso is bonkers. $10B revenue today, but we promise we'll get to $166B in revenue in 5 years, by the simple expedient of growing 75% every year for five years!
FT uses "underwater" because the deal was $300 Billion and the stock has lost $315 Billion in market cap since the deal. That's a bit of a stretch, but the rest of the article is very good.
And as it won't be obvious to everyone here: Alphaville is one of the few free parts of FT online. You need to create an account to access it, but don't need a paid subscription.
Yea these market cap discussions are always a bit meaningless actually, stocks can be volatile for many reasons… its not like they actually lost the delta
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 vaporware like with the cryptocurrency craze - AI, even the relatively lackluster state we have today, has a ton of very useful usage cases that are actually working in the field.
> 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.
That might be precisely why OpenAI is pushing an over investment in infrastructure. When VCs are no longer willing to substitute compute, having more compute available than natural demand will drive the prices down.
There's about to be a huge glut of GPU capacity and we still haven't figured out anything to actually do with all those GPUs that creates value at the scale of society.
Everything they do now steals value. Takes it from artists and bloggers and puts their money in the hands of CEOs and investors. Super efficient idea theft isn't creating new value for society because the value gained is always offset by the destruction of value we already had...
Their customer base rapidly disappeared and they tried to paper over the losses with accounting fraud where they had fake sales of equipment because their actual customers disappeared. They had tons of equipment to sell with few customers left to buy them.
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.
> datacenters depend on used hardware sales to recoup cost
Who? Ive worked for few big infra companies with millions to billions of DC assets. After depreciation and then some, say 3-5 years, theyre effectively scrap. Its more cost effective to buy new, denser, racks than continue to MRC on the stranded space and power. The reseller is cheaper/easier effectively paid to scrap the parts as e-waste and recover what they can.
Datacenters hire companies to do this on their behalf, as they don't have the internal know-how to do this. Even the big cloud companies do this.
They're on 3-5 year cycles, yet the hardware life has a good 8 years in it. The reseller sifts through what comes out, sees what is still alive, scraps what isn't, and resells the rest.
What you don't understand is this isn't a one way relationship. If you're a major cloud company, your hardware probably already is worthless. Meta (and other companies) use a non-standard case and rack "standard" called Open Compute (OCP)... there is no resale market for these, as normal datacenters use normal racks with normal cases. Meta has to pay a company to dispose of these and lose 100% of their investment.
But lets say we go to someone else that does use standard hardware, and the rest of the industry buys this stuff up (to maintain existing fleets that don't need upgraded yet, not everybody is on some ridiculous 3-5 year churn), the company you partnered with to deal with your e-waste is likely to either give you a much better rate or even pay you for your hardware (if it is in high demand).
These enterprise inference machines have zero resale value. Even the OCP stuff I mentioned above has a small market (theres a few smaller datacenters out there toying with OCP due to it having better density, but aren't willing to buy new to test it out), but there is no market for these inference SBCs.
See my sibling comment to this for more information on why the SBCs are uniquely weird.
Maybe i read too much in to “depend on used hardware sales.” Ive worked for 2/5 and 3/15 largest us companies doing cloud and infra stuff. Recovered costs from EOL hardware has just never ever mattered. Not even a rounding error on P&L and hardware/dc org has 1000 higher value priorities. Ill admit maybe the offset costs were squirreled away in finance but not visible to the business.
Even with zero resale value thats “fine.” Anytime Ive owned capacity planning it’d be more cost effective to pay someone a multiple of rack MRC to get the hardware out and free up the space and whips. The impediment was almost always free hands and coordination functions that were being spent on new adds rather than replacement.
E-waste disposal is a huge cost, and it might be entirely possible you're not seeing the cost, or you're not aware of what a badly negotiated contract looks like.
Also, a lot of the industry runs on incredibly poor margins. The only datacenter space in the world right now printing money is either owned by clouds or owned by the AI bubble (which are sometimes the same companies, or the cloud leasing space to the AI bubble).
Mostly, profits are eaten by power deals (this is why Facebook put their biggest important DCs up where the cheapest power in the US is) or property ownership (buying land, building the DC, paying property taxes, maintaining the building, etc, that shit aint cheap), and then you get to buy hardware and hopefully get customers.
Amazon, Google, Facebook, et al all cheat their way through every loophole known to man to keep the costs down and the profit high; not a lot of it is from scale, even though they're still trying to chase that to the end, too.
They're not GPUs in computers... they're effectively GPUs that are computers. They're a single board computer (SBC), with an ARM CPU that is approximately the scale for desktop but not the scale for enterprise, conjoined with 2 extremely large GPUs that are siblings to the desktop version.
Each GPU chip is approximately twice the size of the biggest desktop version, and it has two of them, and it roughly twice as dense as anything else you could do using normal enterprise-dense GPU deployments (ie, those rigs that have 4 x16 slots and fit dual-slot GPUs across 8 slots)
However, these are not the same chips, they are siblings: the major change is, depending on the generation, they contain 2x or 4x matrix math ALUs and no texture units.
Seeing as it is a "small" (for enterprise) CPU, and a GPU that is very poor at non-matrix GPU tasks; and since it doesn't have TUs or media controllers (thats the thing that does DP/HDMI and video decoding/encoding) it can't be some weird niche desktop.
Unless you're doing inference at home, this thing is useless. Inference at home, and even small scale enterprise inference, is very very niche. There isn't enough market to give these boards a second chance.
However, totally normal used server parts? Totally useful. Cases, fans, power supplies, motherboards, CPUs, RAM, HBA/RAID, NICs? All useful to end users, either smaller companies doing inexpensive onsite, smaller datacenters maintaining an existing fleet and not needing to upgrade yet, or people building home labs.
It's very rare that you'll be at the exact point where it does make sense to use the "not quite high-power GPU racks".
* Lowest short term costs favors "just use the Cloud" solutions, that will often have power, HVAC and space constraints that favors new GPUs.
* Lowest long term costs bias the cost analysis to OPEX, where old GPUs gets expensive very fast, as they use more power, HVAC and space for less compute.
> there will always be someone willing to pay them for GPU compute capacity.
There is an hourglass shape to emerging technologies. Everyone uses commodity hardware and duct tape to try to win the race to the bottleneck, where everyone save 2 companies goes bankrupt. As it narrows companies have learned enough about the problem to start developing purpose built solutions. Once you pass the bottleneck enough of your engineers go to other companies that the custom solution becomes mainstream and competition grows again.
Google was working on custom chips for AI before we knew it was AI. They are going to survive either as the dominant player in AI or as the underlying platform everyone else builds on.
That leaves one other spot for everyone else racing to the eye of the needle. Anyone betting on Oracle to win on technology is silly, betting on Oracle with a bunch of generic GPUs that anyone can get is down right dumb.
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.
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 universe” are Enron style disasters.
The SEC is essentially gone. Their contracts with FINRA mostly cancelled. You can’t invest like it’s 2024.
Is it just me, our does this feel like the AI grifters doing the same market manipulation tricks that their new best friends (or their past selves) the Crypto Currency grifters used, only this time with private company stock price insane valuation deals instead of magical internet money beans?
They don't have to do that today, though. Remember original Google? Or original Gmail? Neither had prominent ads for the first few years, a couple decades later the ads are everywhere.
OpenAI isn't burning through tens of billions of dollars every year on its free tier for charity. It will dial up the advertising knob (and every other knob) to 11 the moment the cash starts to runs out.
How is it different than Google Summaries or AMP or any of the other ways Google tried to keep people from actually visiting the websites that drive all of their traffic.
I usually do the same, but not always. And I believe clicking through is a behavior of a minority of people and interactions, judging by the click through rate drops sites have seen recently. (On mobile at the moment, so apologies for not grabbing a source for the rate drops sites.)
But what does win mean here? It's commoditized at this point, everyone's got options, and it's easy to swap models. This means the user share will be spread out among the different offerings. There's no winner take all scenario.
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.
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.
Isn’t Gemini the same price for the same usage as OpenAI? I agree they bundle extra things in there, but you don’t have to use them. If you just used Gemini for $20 you’d be equally situated as OpenAI for $20 on the model front.
If you remove AGI dream from the equation, AI revenues couldn't come close everpresent ads on the internet which Google has monopoly over, and LLM directly affects Google core business.
Also Google doesn't have great business reputation for sticking to their APIs, so they need to be lot better than open model always, which it is now but my guess would be it wouldn't be for long.
I so desperately want to make a snide comment about foreseeing the future but the reality is the CapX is so muddied that I’m afraid everyone is going to feel it.
Exactly, the really frightening thing is Altman taking OpenAI public to get it into the SP500 and it completely falls apart then. In that case, we all get to hold the bag.
> Altman taking OpenAI public to get it into the SP500
There are eligibility requirements to meet before a stock can even be considered for inclusion into the SP500, and it’s hard to see how OpenAI, if they ever get into the situation where they need a public bag holder, could pull off another restructuring and then seasoning before the whole world realizes what’s going on.
Be wary. Pay attention. But don’t lose any sleep over it.
Isn't it the whole point of current AI environment? "We can't, we shouldn't, yet we did and look at our stock".
I won't bet anything at it but the whole thing, the whole AI economy looks like a big YOLO, so taking another step further into this insanity is, well, just another step. Who knows, maybe next day Beff Jezos will IPO newly established company and somehow pull 1T IPO in 10 days of company existence. Wouldn't it be a sight?
It's been 2 months. Certianly not a worthwhile time horizon to judge this investment over.
The apartment I bought 3.5 years ago is worth less than when I purchased. But buying an apartment if you plan to sell after 3.5 years is nuts. I'm confident it'll be worth more than I bough 7 or so years from now.
Also, 3.5 years ago, interest rates were significantly lower. I hadn't taken the opportunity to buy when I did, getting into the market would cost me much more and my eventual returns would be much lower.
I see that the stock price jumped high on Sept 10 and is now back to where it was the day before.
So what is Oracle spending the $300B on? Did they get any percentage ownership of OpenAI? Is it building out the cloud hardware data center? Can anyone other than OpenAI use it?
Sure but everyone knows when earnings happens. If you think something is overpriced and a new balance sheet liability will "show" it, shorting around after earnings with something simple (a hedged short or a put) isn't that hard.
If not you're just doing the social media thing where you say opinions that the peanut gallery is likely to agree with and smash the upvote button. I guess it's safer to fish for upvotes than money?
And social media will upvote the preferences of the community over the truth until the heat death of the universe.
This quote is the dumbest thing. There are traders at firms that make money from the market every day. Chances are you may even benefit from products these traders sell to more risk averse people.
It's totally fine to say something like "I'm worried that the actual products that the AI boom are producing won't generate enough revenue to justify these levels of investment." But the silly doomshilling happening constantly makes no sense. Perhaps more saliently, if you treat the market as a source of economic information, the doomshilling seems to offer no new information at all.
how many people here are professional trader firms trading someone else's money. if I broke my children do not eat.
you could say for half of all threads here, don't talk about it, it's all just doomshilling, just shut up and make a bet on polymarket and make some quick buck instead. but to me it sounds like it's censoring people. these talks is why a forum exists.
sure I also agree that some comments like "ah stock is overpriced" doesn't give much useful info. feels like a low effort manipulation somebody would say publicly if he was a trading firm and wanted to get stock lower to buy some. but I would say "why?" not "shut up and go gamble on it".
> how many people here are professional trader firms trading someone else's money. if I broke my children do not eat.
"It often happens that someone propounds his views with such positive and uncompromising assurance that he seems to have entirely set aside all thought of possible error. A bet disconcerts him. Sometimes it turns out that he has a conviction which can be estimated at a value of one ducat, but not of ten. For he is very willing to venture one ducat, but when it is a question of ten he becomes aware, as he had not previously been, that it may very well be that he is in error. If, in a given case, we represent ourselves as staking the happiness of our whole life, the triumphant tone of our judgment is greatly abated; we become extremely diffident, and discover for the first time that
our belief does not reach so far. Thus pragmatic belief always exists in some specific degree, which, according to differences in the interests at stake, may be large or may be small." -- Immanuel Kant
Perhaps having our opinions moderated by our appetites to bet behind them would help offer a better picture of the world to us than just holding ideas and airing it out to the commons. If you don't want to do that, maybe don't rush to judgement. There's lots of things in the world that I don't understand and I don't have opinions on; I trust that the experts in those fields have informed opinions.
> you could say for half of all threads here, don't talk about it, it's all just doomshilling, just shut up and make a bet on polymarket and make some quick buck instead. but to me it sounds like it's censoring people. these talks is why a forum exists.
I don't think a forum should exist for banal thoughts. Online forums shouldn't be places for people to just say whatever they think. The defining problem on the internet is Low SNR; the amount of irrelevant content far exceeds the amount of relevant content. Search engines and LLMs are huge industries all oriented around surfacing relevant content. I don't think contributing to the net's low SNR to speak "your truth" is a good thing. The end result of that is an internet filled with banal, irrelevant, often incorrect information.
> not "shut up and go gamble on it".
I'd say "if you have nothing new to add, shut up and maybe go gamble on it to test your feelings"
> There's lots of things in the world that I don't understand and I don't have opinions on; I trust that the experts in those fields have informed opinions.
Betting money on some stock makes you an expert in some subject? Cmon
This is hacker news, many here are literally experts on this thing, and not experts in finance, and not into gambling.
> I don't think contributing to the net's low SNR to speak "your truth" is a good thing
And you are saying people should only be allowed to say whatever they decide to put money on knowing full well that if enough rich people prop stock up for long enough short attempt will fail even if the company is bullshit hype. This just creates a rich people echo chamber that's all.
> And you are saying people should only be allowed to say whatever they decide to put money on knowing full well that if enough rich people prop stock up for long enough short attempt will fail even if the company is bullshit hype.
No I'm saying that if you don't have anything new or informative to say, don't say it. I don't really talk about why AI is a bubble because I have nothing new to add that hasn't already been said even though I believe it too. Things I am informed about and are different from what others have already said, I say. Obviously the line here is quite vague but I think we should err on the side of saying less not more.
> This is hacker news, many here are literally experts on this thing, and not experts in finance, and not into gambling.
In my own area of expertise, < 10% of HN commenters (depending on the thread) actually understand what's going on. The rest really don't. I think you see expertise on this site where I do not. It's true a few experts in my field are on here but there are many more in other places like project Discords or Twitter or even mailing lists.
Anyway I don't think there's much more to be gained by us talking. I think we have two fundamentally different views on what this site should be. Thanks.
> No I'm saying that if you don't have anything new or informative to say, don't say it.
I don't see anyone else saying that here yet though? Every day new people learn about that quote, its a good quote that helps many not lose money, its not bad to post it where its relevant.
If you goad people to lose their money then they can defend with that quote, that is fine.
> I don't see anyone else saying that here yet though?
My original thought was:
> It's totally fine to say something like "I'm worried that the actual products that the AI boom are producing won't generate enough revenue to justify these levels of investment." But the silly doomshilling happening constantly makes no sense. Perhaps more saliently, if you treat the market as a source of economic information, the doomshilling seems to offer no new information at all.
I'm not sure what folks are thinking about money when they read what I say. I think there's some imputed values about gambling and money there (namely I read some values about gambling being bad and money being dangerous) that might be confusing from my point.
Money is just the tool to hold one accountable for what they say. Saying something like "oh it's obvious Oracle is in trouble, AI is a bubble it's going down" (not actually what GP said) is, to me, a post of sentiment without information. It's the kind of thing I do in group chats not online forums. I think it's important for folks who post a sentiment to either post why they believe that sentiment with some amount of detail or to have some consequence for failure for their sentiment. Or else the commons are polluted with irrelevant at best and incorrect at worst content.
Put another way, I think the open internet needs a much, much, much higher level of gatekeeping than it gets now. Putting money behind your beliefs is one way to do this. And since we're talking about publicly tradable financial instruments, it seems like a fairly obvious one.
Money is not dangerous, it is necessary for life, that's the point
Some people have a lot of it and who has more can gang up and influence markets meaning anyone who tries to prove a point to you by shorting a legitimately overpriced stock will be holding a bag
So that's why forums exist and it is good to be able to say what you think and not get bullied into shutting up
if you want economic information then why are you in this forum, just go to the market and let people discuss things;) if you participate in that discussion then that's your choice
This is such a poor excuse for not being confident enough in your beliefs to put your own skin in the game. It's revealed preference vs. stated preference.
But in all likelihood, the people saying "I told you so!" never actually knew what they claimed to know.
If you want to know what someone actually believes, don't look at their comments, look at their positions.
Bad news, 60/40 isnt a diversification strategy the last few years. 1) positive correlation in equity and fixed income 2) US treasuries/dollars have not had a “flight to safety” bump when volatility/l or bad news happens recently 3) treasuring moving to “all” short term debt, short term rate cuts resulting in long term rate increases.
This used to be the case, but bonds have been positively correlated with stocks in recent years, so they have not been an effective hedge. Additionally, it seems possible/likely that we are headed into the long-predicted COVID stagflation, where growth is slow, so interest rates are low, but inflation remains high, which makes bonds unappealing.
CDs (and I-bonds) are very different instruments than bonds. If "bad things" happen and rates go down the CD will not appreciate in value like the bond will.
Maybe, but not Oracle. Oracle is friends with the regime: Larry Ellison's kid runs TikTok and has promised to use it to push more conservative content. They'll get bailed out.
One must love the projections of >50% YOY growth for 5 straight years.
Why not continue for the next 5 ? Maybe they will find customers on Mars.
This while situation is very strange - there are some big companies pouring tens of billions into it (Alphabet, Meta) - since they don't have anything better to do with the money printers they have, but there are several others whose valuations are based on completely unrealistic projections where their expected revenues in 5-10 years represent 99% of their current 'value'.
Traditionally one is supposed to return money you don’t have anything better to do with to shareholders in dividends, but that is sadly out of fashion with tech companies.
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?
Oracle is the one to look out for if/when the bubble bursts. Most of the big tech will be fine, albeit hurting for a while. For Oracle, this might be existential.
But there would be other consequences too, just consider the philanthropic organizations that Larry Ellison supports! Like the Ellison Medical Foundation, a non profit whose sole purpose is to keep Larry Ellison alive as long as possible!
Larry Ellison owns 40% of Oracle ($625B market cap) as of today. So even if Oracle tanks and becomes a $60B company (10% of what is worth today), Larry will still be a billionaire worth $25B. He will keep his private islands and yachts.
Please stop. This kind of rage-posting is not what HN is for. It's fine to think whatever you want about Mr Ellison or any other tech luminaries, and criticize them for whatever you like. But commenting in this style does nothing to harm Ellison, whilst making HN a dismal place for your fellow community members who do actually read what you post.
Maybe the entire purpose of OpenAI was to suck all the inflation the US government created on the last decade and burn it out in a huge bonfire at the end of its life.
Sam Altman has been playing 6-D chess this entire time, and we thought he was just a fraudster.
In a universe where all AI investment goes to zero, wouldn’t you have the opposite effect? You can torch wealth but not the money supply, which ultimately _increases_ inflation, not decreases it.
There is only a short term inflation decrease while we produce what people mistakingly think is wealth. That can evaporate, but the money supply won’t.
It's confusing, but bankruptcy destroys mainly money, and only has second order effects on wealth.
What makes it hard to understand is that the Oracle going bankrupt on their debit because OpenAI took all their money is what would destroy the money. AFAIK, OpenAI itself doesn't have a lot of debit to burn. It would burn money that is currently on the hands of Oracle's creditors.
And bankruptcy is a bit of an extreme example, but just people thinking Oracle is less credit-worthy would destroy some money already. Repeat that for every company that invested in OpenAI.
>Maybe the entire purpose of OpenAI was to suck all the inflation the US government created on the last decade and burn it out in a huge bonfire at the end of its life.
This has seriously crossed my mind as well. Like we've reached an endgame here where big tech has now found a way to literally burn off trillions of dollars into waste heat.
Don't they still sell a database product? As long as they don't do the Venture Capital thing and sell off the most promising business units there should still be something for the company to do after the AI bubble implodes. Certainly there will be a lot of layoffs, and maybe even a chapter 13, but I don't think they'll stop existing.
So this economist is saying that a deal is only good if it raises the subjective share price? That is some distorted world view of finance that aims to just repeat the ai bubble narrative that is popular these days
How is that “distorted”? The classic evaluation of a stock is (yeah I’m simplifying) is the present value of all future returns. If a deal doesn’t increase expectations of future returns, it would seem to be the market showing its lack of confidence in the deal
Companies don't ever "have" things, they are themselves things that people have. There isn't a fundamental difference between taking a loan smaller than their total capitalization or spend some money they have liquid at the bank. It's both taking money from the shareholders and spending on something.
That said, yes that investment is stupid and deserves quotes around the word. But making risky investments when the company is operating in the red isn't stupid at all... it's just that this one isn't risky, it's certainly bad.
I seem to recall Musk saying something about OpenAI being over-valued/under-funded earlier this year. Of course he was summarily booed off the stage by the startup crowd.
I might be misunderstanding what booing means then. My understanding is covering another person's voice with shouts in order to sabotage his speech. It might indeed be part of what some society might define free speech, but I'd consider it more of a coward form of violence.
If with "booing" you mean "disrespect whatever good idea a person has because it also has very bad ideas", then I wonder who we will end up respecting. Even I have ideas I end up discovering bad. Should I boo myself and ignore everything else I say?
If I am missing another definition of booing then I am sorry.
That is exactly what booing is, but citizens are allowed to boo. I can boo you, you can boo me. If you are booing me then I can walk away, and likewise you can walk away from me. If I'm booing you during a public performance that is indeed rude but then I need to be thrown out by security, which is perfectly allowed and expected.
Citizens, i.e each other, are not the problem when it comes to free speech, ever. The only entity which needs to be defended against is the entity that has a monopoly on violence, which is of course the government.
This slide from their investor preso is bonkers. $10B revenue today, but we promise we'll get to $166B in revenue in 5 years, by the simple expedient of growing 75% every year for five years!
https://d9j0pm70mrv84f.archive.is/Qdf2n/baa236e2a4d94d45fe93...
Itanium sales projections vibes
>Itanium sales projections vibes
We should be so lucky as to compare 2025 to 1997, when Itanium and its projections were announced.
Feels a bit like Elons 1tn deal
FT uses "underwater" because the deal was $300 Billion and the stock has lost $315 Billion in market cap since the deal. That's a bit of a stretch, but the rest of the article is very good.
FT Alphaville is the (very good) blog-style section of the FT, so this point is meant slightly tongue-in-cheek, as Bryce hints at himself.
And as it won't be obvious to everyone here: Alphaville is one of the few free parts of FT online. You need to create an account to access it, but don't need a paid subscription.
Yea these market cap discussions are always a bit meaningless actually, stocks can be volatile for many reasons… its not like they actually lost the delta
Oracle has no IP in this deal. All they are doing is unpacking Nvidia servers, plugging it in, and keeping them cool. They get 15% markup for this.
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 vaporware like with the cryptocurrency craze - AI, even the relatively lackluster state we have today, has a ton of very useful usage cases that are actually working in the field.
> 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.
That might be precisely why OpenAI is pushing an over investment in infrastructure. When VCs are no longer willing to substitute compute, having more compute available than natural demand will drive the prices down.
We’re talking about building 10x existing datacenter capacity to support you based ai workloads. There will be no other buyer if OpenAI goes bust.
Yeah, but pay them how much?
There's about to be a huge glut of GPU capacity and we still haven't figured out anything to actually do with all those GPUs that creates value at the scale of society.
Everything they do now steals value. Takes it from artists and bloggers and puts their money in the hands of CEOs and investors. Super efficient idea theft isn't creating new value for society because the value gained is always offset by the destruction of value we already had...
What happens if you've got $300B worth of shovels but can only realistically rent them out for $5B/yr?
Nortel was a shovel maker selling shovels to ISPs.
Nortel was a bit different - I think the Chinese hack really killed them. Investors got the jitters then jumped ship or something?
But the inadequate sale value of shovels holds.
Their customer base rapidly disappeared and they tried to paper over the losses with accounting fraud where they had fake sales of equipment because their actual customers disappeared. They had tons of equipment to sell with few customers left to buy them.
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.
> datacenters depend on used hardware sales to recoup cost
Who? Ive worked for few big infra companies with millions to billions of DC assets. After depreciation and then some, say 3-5 years, theyre effectively scrap. Its more cost effective to buy new, denser, racks than continue to MRC on the stranded space and power. The reseller is cheaper/easier effectively paid to scrap the parts as e-waste and recover what they can.
You answered your own question.
Datacenters hire companies to do this on their behalf, as they don't have the internal know-how to do this. Even the big cloud companies do this.
They're on 3-5 year cycles, yet the hardware life has a good 8 years in it. The reseller sifts through what comes out, sees what is still alive, scraps what isn't, and resells the rest.
What you don't understand is this isn't a one way relationship. If you're a major cloud company, your hardware probably already is worthless. Meta (and other companies) use a non-standard case and rack "standard" called Open Compute (OCP)... there is no resale market for these, as normal datacenters use normal racks with normal cases. Meta has to pay a company to dispose of these and lose 100% of their investment.
But lets say we go to someone else that does use standard hardware, and the rest of the industry buys this stuff up (to maintain existing fleets that don't need upgraded yet, not everybody is on some ridiculous 3-5 year churn), the company you partnered with to deal with your e-waste is likely to either give you a much better rate or even pay you for your hardware (if it is in high demand).
These enterprise inference machines have zero resale value. Even the OCP stuff I mentioned above has a small market (theres a few smaller datacenters out there toying with OCP due to it having better density, but aren't willing to buy new to test it out), but there is no market for these inference SBCs.
See my sibling comment to this for more information on why the SBCs are uniquely weird.
Maybe i read too much in to “depend on used hardware sales.” Ive worked for 2/5 and 3/15 largest us companies doing cloud and infra stuff. Recovered costs from EOL hardware has just never ever mattered. Not even a rounding error on P&L and hardware/dc org has 1000 higher value priorities. Ill admit maybe the offset costs were squirreled away in finance but not visible to the business.
Even with zero resale value thats “fine.” Anytime Ive owned capacity planning it’d be more cost effective to pay someone a multiple of rack MRC to get the hardware out and free up the space and whips. The impediment was almost always free hands and coordination functions that were being spent on new adds rather than replacement.
E-waste disposal is a huge cost, and it might be entirely possible you're not seeing the cost, or you're not aware of what a badly negotiated contract looks like.
Also, a lot of the industry runs on incredibly poor margins. The only datacenter space in the world right now printing money is either owned by clouds or owned by the AI bubble (which are sometimes the same companies, or the cloud leasing space to the AI bubble).
Mostly, profits are eaten by power deals (this is why Facebook put their biggest important DCs up where the cheapest power in the US is) or property ownership (buying land, building the DC, paying property taxes, maintaining the building, etc, that shit aint cheap), and then you get to buy hardware and hopefully get customers.
Amazon, Google, Facebook, et al all cheat their way through every loophole known to man to keep the costs down and the profit high; not a lot of it is from scale, even though they're still trying to chase that to the end, too.
> this hardware has no resale value.
> It's literally garbage the moment it leaves the factory.
Sorry I'm new to this, can you explain how? Why would high-power GPU racks not have good resale value?
They're not GPUs in computers... they're effectively GPUs that are computers. They're a single board computer (SBC), with an ARM CPU that is approximately the scale for desktop but not the scale for enterprise, conjoined with 2 extremely large GPUs that are siblings to the desktop version.
Each GPU chip is approximately twice the size of the biggest desktop version, and it has two of them, and it roughly twice as dense as anything else you could do using normal enterprise-dense GPU deployments (ie, those rigs that have 4 x16 slots and fit dual-slot GPUs across 8 slots)
However, these are not the same chips, they are siblings: the major change is, depending on the generation, they contain 2x or 4x matrix math ALUs and no texture units.
Seeing as it is a "small" (for enterprise) CPU, and a GPU that is very poor at non-matrix GPU tasks; and since it doesn't have TUs or media controllers (thats the thing that does DP/HDMI and video decoding/encoding) it can't be some weird niche desktop.
Unless you're doing inference at home, this thing is useless. Inference at home, and even small scale enterprise inference, is very very niche. There isn't enough market to give these boards a second chance.
However, totally normal used server parts? Totally useful. Cases, fans, power supplies, motherboards, CPUs, RAM, HBA/RAID, NICs? All useful to end users, either smaller companies doing inexpensive onsite, smaller datacenters maintaining an existing fleet and not needing to upgrade yet, or people building home labs.
It's very rare that you'll be at the exact point where it does make sense to use the "not quite high-power GPU racks".
* Lowest short term costs favors "just use the Cloud" solutions, that will often have power, HVAC and space constraints that favors new GPUs.
* Lowest long term costs bias the cost analysis to OPEX, where old GPUs gets expensive very fast, as they use more power, HVAC and space for less compute.
2026 is the year of Google Stadia /s
> there will always be someone willing to pay them for GPU compute capacity.
There is an hourglass shape to emerging technologies. Everyone uses commodity hardware and duct tape to try to win the race to the bottleneck, where everyone save 2 companies goes bankrupt. As it narrows companies have learned enough about the problem to start developing purpose built solutions. Once you pass the bottleneck enough of your engineers go to other companies that the custom solution becomes mainstream and competition grows again.
Google was working on custom chips for AI before we knew it was AI. They are going to survive either as the dominant player in AI or as the underlying platform everyone else builds on.
That leaves one other spot for everyone else racing to the eye of the needle. Anyone betting on Oracle to win on technology is silly, betting on Oracle with a bunch of generic GPUs that anyone can get is down right dumb.
So given depreciation and interest they are negative
I mean that doesn’t have a $0 cost.
It's real upfront cost. They got to build the DCs and put in the hardware.
OpenAI's side of those deals are just announcements, which may become real. Or not.
they also have to find and sign large-scale and long-term power supply deals
https://archive.is/Qdf2n
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.
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 universe” are Enron style disasters.
The SEC is essentially gone. Their contracts with FINRA mostly cancelled. You can’t invest like it’s 2024.
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.
Do you mean the bg2 pod interview?
Is it just me, our does this feel like the AI grifters doing the same market manipulation tricks that their new best friends (or their past selves) the Crypto Currency grifters used, only this time with private company stock price insane valuation deals instead of magical internet money beans?
It’s looking like Google may outdo OpenAI.
ChatGPT has brand recognition and adoption, but not the best product anymore.
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.
> Their business model fails if their users don't experience a confusing crap-fest of ads.
I bet you OpenAI will implement ads far sooner than Google can hypothetically run out of money.
They don't have to do that today, though. Remember original Google? Or original Gmail? Neither had prominent ads for the first few years, a couple decades later the ads are everywhere.
> the more they are failing to push ads in people's faces
Won't be long until chat AI will include sponsored products and services in the output.
OpenAI isn't burning through tens of billions of dollars every year on its free tier for charity. It will dial up the advertising knob (and every other knob) to 11 the moment the cash starts to runs out.
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.
Google also has GCP where it can monetize its hardware investments.
As always, they will keep it clean until they can crank that enshitification dial to 11.
And they also have their own chips (TPUs), no need for Nvidia
And the search engine and crawler actually powering these LLMs
How is that not a conflict of interest by the way, when Google's AI search results prevent the websites it trained on from getting clicks?
How is it different than Google Summaries or AMP or any of the other ways Google tried to keep people from actually visiting the websites that drive all of their traffic.
Am I the only one that clicks through to the sources cited?
I usually do the same, but not always. And I believe clicking through is a behavior of a minority of people and interactions, judging by the click through rate drops sites have seen recently. (On mobile at the moment, so apologies for not grabbing a source for the rate drops sites.)
In the grand scheme of things? Yes.
> ChatGPT has brand recognition and adoption, but not the best product anymore.
Companies with worse products win all the time based on brand and adoption. So it isn't clear to me at all that Google can win.
But what does win mean here? It's commoditized at this point, everyone's got options, and it's easy to swap models. This means the user share will be spread out among the different offerings. There's no winner take all scenario.
> Companies with worse products win all the time based on brand and adoption.
Like google.
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.
Unless I’m missing something, Google doesn’t really have the “chat journal” aspect that ChatGPT has. It’s just a search engine.
For me personally this is a major feature.
https://gemini.google.com/
No folders or way to organize the history. It’s just a log of questions.
ChatGPT is much more designed around organizing your projects and folders.
What's a chat journal besides a history, which Gemini has?
There isn’t really a folder or project structure, as far as I can tell. (Just trying the app now.)
I imagine the majority of Gemini users are still via Google search, whereas ChatGPT usage is through the app.
NotebookLM?
You can get a $20 OpenAI subscription for some serious usage.
Google has no such thing for Gemini, it's subscriptions are brain-dead, expensive bundled with 2 TB of storage and other shit that I don't want.
Isn’t Gemini the same price for the same usage as OpenAI? I agree they bundle extra things in there, but you don’t have to use them. If you just used Gemini for $20 you’d be equally situated as OpenAI for $20 on the model front.
It's actually cheaper if you subscribe as family on Google One.
If you remove AGI dream from the equation, AI revenues couldn't come close everpresent ads on the internet which Google has monopoly over, and LLM directly affects Google core business.
Also Google doesn't have great business reputation for sticking to their APIs, so they need to be lot better than open model always, which it is now but my guess would be it wouldn't be for long.
The plan is to charge per core...tensor core
so, these companies are playing hot potato and this is oracle holding it.
I so desperately want to make a snide comment about foreseeing the future but the reality is the CapX is so muddied that I’m afraid everyone is going to feel it.
Exactly, the really frightening thing is Altman taking OpenAI public to get it into the SP500 and it completely falls apart then. In that case, we all get to hold the bag.
> Altman taking OpenAI public to get it into the SP500
There are eligibility requirements to meet before a stock can even be considered for inclusion into the SP500, and it’s hard to see how OpenAI, if they ever get into the situation where they need a public bag holder, could pull off another restructuring and then seasoning before the whole world realizes what’s going on.
Be wary. Pay attention. But don’t lose any sleep over it.
It would be an Adam Neumann moment. There’s no way OAI can IPO with its current financials.
Isn't it the whole point of current AI environment? "We can't, we shouldn't, yet we did and look at our stock".
I won't bet anything at it but the whole thing, the whole AI economy looks like a big YOLO, so taking another step further into this insanity is, well, just another step. Who knows, maybe next day Beff Jezos will IPO newly established company and somehow pull 1T IPO in 10 days of company existence. Wouldn't it be a sight?
AFAIC, the correct take on the situation is thus:
https://files.catbox.moe/ufn8qa.png
And if even these guys can see it, we're screwed.
In more ways than one - I don't know how, but I predict that Sam, like Adam, would somehow still walk away a billionaire while the company imploded.
Oracle doesn't own the GPUs themselves and may hold as little as 10% of the Stargate bag.
Please let it be true.
It's been 2 months. Certianly not a worthwhile time horizon to judge this investment over.
The apartment I bought 3.5 years ago is worth less than when I purchased. But buying an apartment if you plan to sell after 3.5 years is nuts. I'm confident it'll be worth more than I bough 7 or so years from now.
Also, 3.5 years ago, interest rates were significantly lower. I hadn't taken the opportunity to buy when I did, getting into the market would cost me much more and my eventual returns would be much lower.
The apartment you bought also actually exists and you live in it (or somebody else does, same point). This isn't really the case with this investment
I think Oracle would disagree.
I see that the stock price jumped high on Sept 10 and is now back to where it was the day before.
So what is Oracle spending the $300B on? Did they get any percentage ownership of OpenAI? Is it building out the cloud hardware data center? Can anyone other than OpenAI use it?
As someone paying some vague attention to market movements, this was predictable.
News of a deal and hype was largely responsible for the rise. Now that the sentiment is cooling off, it’s dropping back to a more reasonable level.
So you shorted Oracle and made money?
Knowing a stock is overpriced and knowing when it will correct precisely enough to profit are very different.
Sure but everyone knows when earnings happens. If you think something is overpriced and a new balance sheet liability will "show" it, shorting around after earnings with something simple (a hedged short or a put) isn't that hard.
If not you're just doing the social media thing where you say opinions that the peanut gallery is likely to agree with and smash the upvote button. I guess it's safer to fish for upvotes than money?
the market will be irrational longer than you are solvent;)
And social media will upvote the preferences of the community over the truth until the heat death of the universe.
This quote is the dumbest thing. There are traders at firms that make money from the market every day. Chances are you may even benefit from products these traders sell to more risk averse people.
It's totally fine to say something like "I'm worried that the actual products that the AI boom are producing won't generate enough revenue to justify these levels of investment." But the silly doomshilling happening constantly makes no sense. Perhaps more saliently, if you treat the market as a source of economic information, the doomshilling seems to offer no new information at all.
how many people here are professional trader firms trading someone else's money. if I broke my children do not eat.
you could say for half of all threads here, don't talk about it, it's all just doomshilling, just shut up and make a bet on polymarket and make some quick buck instead. but to me it sounds like it's censoring people. these talks is why a forum exists.
sure I also agree that some comments like "ah stock is overpriced" doesn't give much useful info. feels like a low effort manipulation somebody would say publicly if he was a trading firm and wanted to get stock lower to buy some. but I would say "why?" not "shut up and go gamble on it".
> how many people here are professional trader firms trading someone else's money. if I broke my children do not eat.
"It often happens that someone propounds his views with such positive and uncompromising assurance that he seems to have entirely set aside all thought of possible error. A bet disconcerts him. Sometimes it turns out that he has a conviction which can be estimated at a value of one ducat, but not of ten. For he is very willing to venture one ducat, but when it is a question of ten he becomes aware, as he had not previously been, that it may very well be that he is in error. If, in a given case, we represent ourselves as staking the happiness of our whole life, the triumphant tone of our judgment is greatly abated; we become extremely diffident, and discover for the first time that our belief does not reach so far. Thus pragmatic belief always exists in some specific degree, which, according to differences in the interests at stake, may be large or may be small." -- Immanuel Kant
Perhaps having our opinions moderated by our appetites to bet behind them would help offer a better picture of the world to us than just holding ideas and airing it out to the commons. If you don't want to do that, maybe don't rush to judgement. There's lots of things in the world that I don't understand and I don't have opinions on; I trust that the experts in those fields have informed opinions.
> you could say for half of all threads here, don't talk about it, it's all just doomshilling, just shut up and make a bet on polymarket and make some quick buck instead. but to me it sounds like it's censoring people. these talks is why a forum exists.
I don't think a forum should exist for banal thoughts. Online forums shouldn't be places for people to just say whatever they think. The defining problem on the internet is Low SNR; the amount of irrelevant content far exceeds the amount of relevant content. Search engines and LLMs are huge industries all oriented around surfacing relevant content. I don't think contributing to the net's low SNR to speak "your truth" is a good thing. The end result of that is an internet filled with banal, irrelevant, often incorrect information.
> not "shut up and go gamble on it".
I'd say "if you have nothing new to add, shut up and maybe go gamble on it to test your feelings"
> There's lots of things in the world that I don't understand and I don't have opinions on; I trust that the experts in those fields have informed opinions.
Betting money on some stock makes you an expert in some subject? Cmon
This is hacker news, many here are literally experts on this thing, and not experts in finance, and not into gambling.
> I don't think contributing to the net's low SNR to speak "your truth" is a good thing
And you are saying people should only be allowed to say whatever they decide to put money on knowing full well that if enough rich people prop stock up for long enough short attempt will fail even if the company is bullshit hype. This just creates a rich people echo chamber that's all.
> And you are saying people should only be allowed to say whatever they decide to put money on knowing full well that if enough rich people prop stock up for long enough short attempt will fail even if the company is bullshit hype.
No I'm saying that if you don't have anything new or informative to say, don't say it. I don't really talk about why AI is a bubble because I have nothing new to add that hasn't already been said even though I believe it too. Things I am informed about and are different from what others have already said, I say. Obviously the line here is quite vague but I think we should err on the side of saying less not more.
> This is hacker news, many here are literally experts on this thing, and not experts in finance, and not into gambling.
In my own area of expertise, < 10% of HN commenters (depending on the thread) actually understand what's going on. The rest really don't. I think you see expertise on this site where I do not. It's true a few experts in my field are on here but there are many more in other places like project Discords or Twitter or even mailing lists.
Anyway I don't think there's much more to be gained by us talking. I think we have two fundamentally different views on what this site should be. Thanks.
> No I'm saying that if you don't have anything new or informative to say, don't say it.
I don't see anyone else saying that here yet though? Every day new people learn about that quote, its a good quote that helps many not lose money, its not bad to post it where its relevant.
If you goad people to lose their money then they can defend with that quote, that is fine.
> I don't see anyone else saying that here yet though?
My original thought was:
> It's totally fine to say something like "I'm worried that the actual products that the AI boom are producing won't generate enough revenue to justify these levels of investment." But the silly doomshilling happening constantly makes no sense. Perhaps more saliently, if you treat the market as a source of economic information, the doomshilling seems to offer no new information at all.
I'm not sure what folks are thinking about money when they read what I say. I think there's some imputed values about gambling and money there (namely I read some values about gambling being bad and money being dangerous) that might be confusing from my point.
Money is just the tool to hold one accountable for what they say. Saying something like "oh it's obvious Oracle is in trouble, AI is a bubble it's going down" (not actually what GP said) is, to me, a post of sentiment without information. It's the kind of thing I do in group chats not online forums. I think it's important for folks who post a sentiment to either post why they believe that sentiment with some amount of detail or to have some consequence for failure for their sentiment. Or else the commons are polluted with irrelevant at best and incorrect at worst content.
Put another way, I think the open internet needs a much, much, much higher level of gatekeeping than it gets now. Putting money behind your beliefs is one way to do this. And since we're talking about publicly tradable financial instruments, it seems like a fairly obvious one.
Money is not dangerous, it is necessary for life, that's the point
Some people have a lot of it and who has more can gang up and influence markets meaning anyone who tries to prove a point to you by shorting a legitimately overpriced stock will be holding a bag
So that's why forums exist and it is good to be able to say what you think and not get bullied into shutting up
if you want economic information then why are you in this forum, just go to the market and let people discuss things;) if you participate in that discussion then that's your choice
This is such a poor excuse for not being confident enough in your beliefs to put your own skin in the game. It's revealed preference vs. stated preference.
But in all likelihood, the people saying "I told you so!" never actually knew what they claimed to know.
If you want to know what someone actually believes, don't look at their comments, look at their positions.
Time to short major stocks?
Time to put your RRSP / 401k in cash, it's all starting to seriously teeter.
Well, bonds should be OK. CDs, Treasuries, etc
Bad news, 60/40 isnt a diversification strategy the last few years. 1) positive correlation in equity and fixed income 2) US treasuries/dollars have not had a “flight to safety” bump when volatility/l or bad news happens recently 3) treasuring moving to “all” short term debt, short term rate cuts resulting in long term rate increases.
This used to be the case, but bonds have been positively correlated with stocks in recent years, so they have not been an effective hedge. Additionally, it seems possible/likely that we are headed into the long-predicted COVID stagflation, where growth is slow, so interest rates are low, but inflation remains high, which makes bonds unappealing.
CDs (and I-bonds) are very different instruments than bonds. If "bad things" happen and rates go down the CD will not appreciate in value like the bond will.
Maybe, but not Oracle. Oracle is friends with the regime: Larry Ellison's kid runs TikTok and has promised to use it to push more conservative content. They'll get bailed out.
> Larry Ellison's kid runs TikTok
Also Paramount, which owns CBS News among other things. And they are looking to acquire the parent company of CNN.
“Conservative” meaning pro-Israel.
You're 2 weeks late.
LOL the drop from 2 weeks ago is about 4%.
-20% in the last month
Didn't they pop like 30% at last earnings?
Anyways, one stock in 1 month is irrelevant, look at SPY...
Let it ride
Diamond hands
Whoda thought that agreeing to build $300 billion of infrastructure for a company with $20 billion revenue and zero profit was a bad idea?
One must love the projections of >50% YOY growth for 5 straight years.
Why not continue for the next 5 ? Maybe they will find customers on Mars.
This while situation is very strange - there are some big companies pouring tens of billions into it (Alphabet, Meta) - since they don't have anything better to do with the money printers they have, but there are several others whose valuations are based on completely unrealistic projections where their expected revenues in 5-10 years represent 99% of their current 'value'.
Traditionally one is supposed to return money you don’t have anything better to do with to shareholders in dividends, but that is sadly out of fashion with tech companies.
Alphabet at least returns capital via huge buybacks that effectively act as dividends, but with more tax efficiency.
Why would it be in fashion? If you want the money, then sell your shares and don't cause a taxable event for everyone else.
I just hope those AI scammers all crash and burn.
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?
Tiktok, Zoom and Uber use Oracle Cloud.
Google is going to nuke OpenAI from orbit within the year, so hard to imagine these datacenters will be finished when OpenAI implodes.
I am Joe's complete lack of surprise.
Oracle is the one to look out for if/when the bubble bursts. Most of the big tech will be fine, albeit hurting for a while. For Oracle, this might be existential.
Finally, been waiting for this moment since I've learned about Oracle. Would be well-deserved for them. Hope Larry Ellison loses his yacht.
But there would be other consequences too, just consider the philanthropic organizations that Larry Ellison supports! Like the Ellison Medical Foundation, a non profit whose sole purpose is to keep Larry Ellison alive as long as possible!
> to keep Larry Ellison alive
This is called “begging the question”. I need some evidence that Ellison is not an undead.
An undead lawn mower.
That dude literally launched medical foundation for his personal healthcare.
Larry Ellison owns 40% of Oracle ($625B market cap) as of today. So even if Oracle tanks and becomes a $60B company (10% of what is worth today), Larry will still be a billionaire worth $25B. He will keep his private islands and yachts.
These people are in the class that never fails. Ellison won't lose anything.
I'm sure they said the same about Citizen Louis Capet.
One can dream.
[flagged]
Please stop. This kind of rage-posting is not what HN is for. It's fine to think whatever you want about Mr Ellison or any other tech luminaries, and criticize them for whatever you like. But commenting in this style does nothing to harm Ellison, whilst making HN a dismal place for your fellow community members who do actually read what you post.
For me it was a joke. But it wouldn't be the first time something like that happens. I will take your advice with good will. thanks.
So you’re saying there’s an upside?
Maybe the entire purpose of OpenAI was to suck all the inflation the US government created on the last decade and burn it out in a huge bonfire at the end of its life.
Sam Altman has been playing 6-D chess this entire time, and we thought he was just a fraudster.
In a universe where all AI investment goes to zero, wouldn’t you have the opposite effect? You can torch wealth but not the money supply, which ultimately _increases_ inflation, not decreases it.
There is only a short term inflation decrease while we produce what people mistakingly think is wealth. That can evaporate, but the money supply won’t.
It's confusing, but bankruptcy destroys mainly money, and only has second order effects on wealth.
What makes it hard to understand is that the Oracle going bankrupt on their debit because OpenAI took all their money is what would destroy the money. AFAIK, OpenAI itself doesn't have a lot of debit to burn. It would burn money that is currently on the hands of Oracle's creditors.
And bankruptcy is a bit of an extreme example, but just people thinking Oracle is less credit-worthy would destroy some money already. Repeat that for every company that invested in OpenAI.
>Maybe the entire purpose of OpenAI was to suck all the inflation the US government created on the last decade and burn it out in a huge bonfire at the end of its life.
This has seriously crossed my mind as well. Like we've reached an endgame here where big tech has now found a way to literally burn off trillions of dollars into waste heat.
>fraudster excuse me sweaty, AGI is actually around the corner
Don't they still sell a database product? As long as they don't do the Venture Capital thing and sell off the most promising business units there should still be something for the company to do after the AI bubble implodes. Certainly there will be a lot of layoffs, and maybe even a chapter 13, but I don't think they'll stop existing.
Oracle Database Enterprise Edition retails at $47,500 per CPU core (there is a 2-for-1 discount on x86) when licensed this way.
There is extreme caution in deploying new Oracle databases, more so than SQL Sever.
To a first approximation, no new company says “after looking at all of the alternatives, I think we should choose Oracle!”
Also when was the last time you heard companies migrating to Oracle from any DB?
Oh god, that'd be finally some good news in this recent brutal and sad time period.
unfortunately their database continues to print money from trapped customers
the "AI" is just an attempt to pump the stock price
OpenAI though can't survive as there's no business at all to fall back on
Since QE and Zirp and then Covid stimulus money stopped making sense. It is fucking too much money in a few hands.
Sam Altman-Fried
Scam Bankrun Fraud?
So this economist is saying that a deal is only good if it raises the subjective share price? That is some distorted world view of finance that aims to just repeat the ai bubble narrative that is popular these days
How is that “distorted”? The classic evaluation of a stock is (yeah I’m simplifying) is the present value of all future returns. If a deal doesn’t increase expectations of future returns, it would seem to be the market showing its lack of confidence in the deal
How is this even rational that companies "invest" billions of dollars that they dont even have? capitalism ad2025 is a joke
> billions of dollars that they dont even have
Companies don't ever "have" things, they are themselves things that people have. There isn't a fundamental difference between taking a loan smaller than their total capitalization or spend some money they have liquid at the bank. It's both taking money from the shareholders and spending on something.
That said, yes that investment is stupid and deserves quotes around the word. But making risky investments when the company is operating in the red isn't stupid at all... it's just that this one isn't risky, it's certainly bad.
If you can borrow money at X% and make (X+1)% on that money, you do that and invest it. As an individual you can do that by buying stocks on margin.
You can also do it by buying risky stocks and pretending you're buying alpha!
Wait until you discover that the bank doesn't have those dollars in your account.
It mostly does. Treasuries are a kind of dollar.
They could cash out everyone's account from the Scrooge McDuck pile of gold in the vault?
Up to $250k per account yes. The bank would fail but you'd get it over the weekend.
The FDIC currently holds a reserve of 1.28% of deposits. It can handle a single bank run, but not a widespread one.
They don't usually touch the reserve. They tell a bigger bank to buy them over the weekend and back it up.
Afterwards they can use that, charge the other member banks or reopen: https://www.federalreserve.gov/financial-stability/bank-term...
Couldn’t happen to a nicer bunch of crooks
I seem to recall Musk saying something about OpenAI being over-valued/under-funded earlier this year. Of course he was summarily booed off the stage by the startup crowd.
He says a lot of things. Just because some of them end up being true by happenstance doesn't make him a prophet.
As he should be booed off the stages in any respectable society. Regardless of whether he is right or wrong about ai.
> I disapprove of what you say, but I will defend to the death your right to say it.
This is _actually_ what a respectable society does.
Who are you to regulate my booing? Free speech for me, not for thee?
booing is also covered by free speech.
I might be misunderstanding what booing means then. My understanding is covering another person's voice with shouts in order to sabotage his speech. It might indeed be part of what some society might define free speech, but I'd consider it more of a coward form of violence.
If with "booing" you mean "disrespect whatever good idea a person has because it also has very bad ideas", then I wonder who we will end up respecting. Even I have ideas I end up discovering bad. Should I boo myself and ignore everything else I say?
If I am missing another definition of booing then I am sorry.
That is exactly what booing is, but citizens are allowed to boo. I can boo you, you can boo me. If you are booing me then I can walk away, and likewise you can walk away from me. If I'm booing you during a public performance that is indeed rude but then I need to be thrown out by security, which is perfectly allowed and expected.
Citizens, i.e each other, are not the problem when it comes to free speech, ever. The only entity which needs to be defended against is the entity that has a monopoly on violence, which is of course the government.
> but I'd consider it more of a coward form of violence.
Booing being a form of violence is the hottest take i’ve seen this week.
> I'd consider it more of a coward form of violence
If you think that the act of booing is a form of violence, then what do you think about _actual_ hate speech?
Well Elon Musk is working hard to suppress freedom of others and openly supports authoritarian movements.
Using free speech to boo him when he is getting celebrated is defending free speech.
Musk managed to attract so much negative attention that he is going to be booed no matter what.
I happen to agree with him re OpenAI...
Elon Musk is suing OpenAI over the for-profit conversion so that clouds his judgement.