S&P Global has lowered Oracle’s creditworthiness from BBB to BBB-
heise.de
heise.de
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 a house of cards.
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.
https://en.wikipedia.org/wiki/Tulip_mania
> No of course there isn't enough capital for all of this. Having said that, there is enough capital to do this for a at least a little while longer. -- Gil Luria (Managing Director and Analyst at D.A. Davidson)
What ROI? There was no return, and there currently isn't any return on investment, because those companies did not exit yet!
The exit plan is to offload overpriced shares, that they paid billions for, onto the public market. If they don't IPO, those investors get nothing.
I keep seeing these unsubstantiated claims. They’re out to get us and just pump and dump on public markets!
Yet, before they IPO they have to go around and do what? Who sets the IPO price? Who buys the shares? If the shares tank, the valuation of the company goes down and locked up shares lose value. It’s not really in anyone’s interest for IPOs or investments to fail and while pump-and-dump schemes certainly exist they are not the norm. The conspiracy theory level of distrust and cynicism is not healthy and makes one a very poor investor.
If individual investors are buying shares and getting blown up, that’s their problem. Invest and due your own research. Broad market funds exist and have so for decades. Most financial advisors even will put you in to those funds and corporate 401k plans while increasingly allowing for more investment flexibility (freedom is good) default and educate employees by default on target date funds and index funds. There is a wealth of information out there.
"Oh no, my $10B became $5B!"
They'll still be happy.
> If individual investors are buying shares and getting blown up, that’s their problem.
Having the general populace fleeced by bad actors is everyone's problem, eventually.
> Having the general populace fleeced by bad actors is everyone's problem, eventually.
Sure. Creating false narratives and parroting unsubstantiated misinformation and fear mongering is everyone’s problem too.
The flaw in your thinking is assuming it's actually worth the IPO price.
If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario.
Then don't buy it at the IPO price? The bullshit artist will have to lower their price until there are takers in the market.
> If I'm a bullshit artist, $100 is great, $50 is good, and I'm just trying to avoid the $0 scenario.
They're not bullshit artists, they're greedy. If you think you're pulling one over on someone $100 is great but $200 is better - might as well see if you can get $200. Since we're just making up random people and motivations.
I think you're getting lost here.
If I invested $0.50/share, I know my company is worth realistically $10/share, and I can convince you to buy at $100/share, and it plunges to $50/share before I can offload, I am still a pretty happy camper.
Retail investors are the marks, not the scammer here.
> They're not bullshit artists, they're greedy.
Those aren't mutually exclusive.
Musk is both, for instance.
> Retail investors are the marks, not the scammer here.
Retail investors who aren't sophisticated enough to do analysis and evaluate equities shouldn't buy them less they potentially lose (or make) money. You're inventing a scam and scammers where none exist here. Uninformed retail investors, and who knows how much money they even have, should be buying index funds which is what is advised by investment firms, CFPs, and more.
No, I am not. That’s the “it plunges to $50/share before I can offload” period.
Even in this contrived scenario, a stock plunging to 50% of its IPO price doesn't indicate much. It can still be a good investment. Stocks are punished for non-material things all the time.
Even when these mythical scammers that you've completely made up decide to sell, they need willing market buyers. If those market buyers are sophisticated investors then who cares if they lose money - you know the risks.
If they're retail investors then they shouldn't be buying individual stocks in the first place without conducting proper research which would tell them the stock is a good or bad investment based on their own criteria. As I've already mentioned, the default advice and what is common in the industry is to purchase index funds or target date retirement funds. If you go off and buy some stock at IPO you should have done your research, or you can live and die by the results of your investment. Sometimes you even make money.
I'm just not going to accept you or anyone else just making stuff up like this when I see it, calling things pump-and-dumps, and then walking away as though you have some fait accompli and it's all rigged and all the scammers are just scamming and screwing you. There are guardrails, regulations, rules, and standard advice. If you go buy some high-flying IPO and you lose money that is your fault. Learn to be responsible for yourself and stop projecting your own failure and cynicism on others. Cynicism is the refuge of the most foolish of people.
IMO, those shares are overpriced even at private investment levels, but my opinion is still irrelevant to the fact that there is no ROI until the investors exit!
Nobody forces you or any other individual investor to buy shares in their “pump-and-dump company” when it lists.
Who knows? Who cares? My point is that until those investors exit, there is no ROI.
The comment I originally responded to was talking about investors getting ROI from AI companies. I'm pointing out that no such thing will happen until the investors exit.
Ok well they can just exit in private markets before these shares are "dumped" on public markets. Therefore there is an exit and ROI. QED.
Anyway your overall point, which was a bad one I'm sorry to say, was about investors dumping shares of overvalued companies on public markets.
You are ignoring things like lockup periods, vesting schedules, and other general machinery that specifically exist to prevent day 1 or short-term dumps of shares. It's not in the interest of the company that is IPOing or the bank - how can the investment bank go to investors and market securities and then on Day 1 those securities (because it's a pump and dump remember?) drop by 10% - 20% - 30% or more. That's bad business and investors will leave investment firms that did that.
When one of these "overvalued" companies IPO (and let's be honest, you don't know how to value these companies anyway so your accusation of them being overvalued is faulty from the start), someone has to buy those shares. If everyone starts selling, the value of the company and the value of the shares drop unless there are buyers. This doesn't really serve anyones interests and even better, you as an individual investor don't have to be a buyer! If someone wants to buy because their own model says it's worth it, that's up to them to decide, not you. Fortunes are made betting against the market (and betting in the general direction of the market). If someone wants to forgo buying, that's fine too.
For investors who don't know about the values or models of valuations of securities they can just take industry standard advice and buy index funds or target-date retirement funds. Stop infantilizing people and assuming that because you lack the knowledge that others must too, or that everyone is just out to scheme and "dump" on public markets, especially without any evidence or without considering how the IPO machinery typically works, who buys these shares, or the incentives.
Oracle paid out 5 billion in interest last fiscal year.
Well, they certainly tried to, with SpaceX.
Information is only relevant in the long term, in the short term the stock market is about FRIENDSHIP.
Just friendship and love :)
This is simply absurd. Of the investment banks that helped SpaceX IPO, Goldman Sachs has their price target at $205 (139x implied price to sales), JP Morgan at $225 (152x implied P/S), Deutsche Bank at $255 (173x implied P/S), Morgan Stanley at $300 (203x implied P/S), and Raymond James at $800 (542x implied P/S). It's the 1920s all over again; publicly pump and privately sell into the demand you're creating. I'm guessing you're perfectly fine with this behavior from the largest market participants?
It's not the 1920s all over again.
> Of the investment banks that helped SpaceX IPO, Goldman Sachs has their price target at $205 (139x implied price to sales), JP Morgan at $225 (152x implied P/S), Deutsche Bank at $255 (173x implied P/S), Morgan Stanley at $300 (203x implied P/S), and Raymond James at $800 (542x implied P/S). ... I'm guessing you're perfectly fine with this behavior from the largest market participants?
Who do those investment banks sell to? How familiar are you with, for example, Goldman Sachs finding buyers for SpaceX shares? The minimum account requirement at Goldman last I checked was something like $10mm - do you really care if such investors are buying shares in overvalued companies or, like me, declining to purchase?
You are just throwing things around and not providing a coherent argument. Everyday investors don't have to buy these shares. They can continue to follow industry standard advice to buy total market index funds, or target date retirement funds or whatever. Investment banks sell to high net worth individuals who are by definition sophisticated investors - they know and accept the risk of such offerings. So no I don't care even a tiny bit if a Morgan Stanley client decides to buy what you consider to be overpriced shares in a "pump-and-dump" scheme based on your own certainly flawed and unsophisticated valuation of SpaceX or any other company.
And you can just not buy the shares. It's very straightforward.
Sure, but the SEC exists, in theory, to make that decision one you can make an informed decision on, because con artists don't typically put a disclaimer in that says "this is bullshit".
Most retail investors suffer from significant information asymmetry. We have regulations, in part, to mitigate this fact.
> Just because you think something is bullshit doesn't mean it is.
A point you yourself might remember when arguing on the internet.
I don't disagree - however that's a separate point from the OP's it's all a scam and pump-and-dump sentiments and doesn't detract from any point I've made.
> A point you yourself might remember when arguing on the internet.
I know it feels great to write things like this but I don't care - my point stands alone and it's only applicable to you and what you wrote regarding valuations.
A pump and dump scam doesn’t care if valuation goes down as long as they can exit profitably.
Already explained things like lockup periods. Investment firms marketing the IPO also do. not. want. IPO prices to crater after the IPO. It makes them look bad, it harms their business, investors will avoid shops that loop them in on what turn out to be obvious scams or whatever. But even if they don't, who cares? They (I) are sophisticated investors. If I make a bad investment I'm an adult with means and I can live with the consequences.
Why didn't I buy the SpaceX IPO? Because I think it's a crappy investment! They tried to pump-and-dump but they sure couldn't catch me. See how easy it is?
I feel like you're unclear on what information asymmetry means.
This is "just don't get murdered!" style advice.
> Why didn't I buy the SpaceX IPO? Because I think it's a crappy investment! They tried to pump-and-dump but they sure couldn't catch me. See how easy it is?
The naïve retail investors you suggest should buy index funds will be exposed to SpaceX and the other AI companies through them, no?
You're exposed to any company that hits the public market, depending on which ETF you buy. Could be the S&P 500 or a Total Market Index or some mix of those two plus international ETFs. You name it. Of course that's the downside of the ETF, but it's also the upside because the assumption is you can't pick winners and losers in the market so you buy them all.
I think, for example, Microsoft is a terrible investment because almost all of their products suck ass. I have shares though through an ETF and that's the price I pay because while I think it's a terrible investment I could be wrong. Just like you can be wrong about SpaceX.
Your point of contention here really just doesn't make a lot of sense.
You're declaring IPOs like SpaceX to be pump-and-dumps but not providing your own research and valuation model, and then at the same time complaining that retail investors who aren't doing their own research are going against industry advice and buying those IPOs, while also complaining that big banks shop IPO deals (as they have done for a century) to their high net worth clients who are... responsible investors who are making sophisticated decisions? And of course you're ignoring the fact that in order to offload bags one has to find someone to offload those bags to, there are lockup periods, due diligence, and other mechanisms in place to prevent or mitigate the scenario you are describing because it is bad business and you can be sued for doing shady things.
And you know what, maybe you're just wrong about SpaceX[1] and because the retail investors have shares due to the ETF they make more money than they otherwise would. In other words, calling something a pump-and-dump is just like, your opinion.
[1] I have no shares in SpaceX and don't care much about the company one way or the other besides being generally positive on space technology and exploration. I think Elon Musk is a loser, and I also don't own any direct shares in Tesla.
Nice strawman, but that's not what I said.
They can, and do, intervene in things like lying to investors to inflate valuations.
https://x.com/elonmusk/status/2075291102324641925
At what point does the optimism become a lie?
Of course, the aspiration and attempt may fail, but in this quote they did say if.
You're letting your dislike/distrust of Elon Musk cloud your judgement. If you don't like him or don't like what he says, don't buy shares in his companies, don't buy his products, and don't read what he writes.
I can do this, too, you know? "Nuh uh!"
> What's the total value of all minerals and resources on Earth.
That seems like an odd definition for Earth's value.
> You're letting your dislike/distrust of Elon Musk cloud your judgement.
No, I'm considering the fact that he has provably (in court!) lied about stuff like this, repeatedly, to the point of the SEC slapping a minder on the guy's tweets for a while.
It's not, you're just being argumentative for no reason.
It's very normal for someone to value a planet or other celestial body in terms of the value of the minerals or other resources on that body.
You can ask for clarification from them for what they really mean though, but just calling it an outright lie doesn't seem accurate.
> No, I'm considering the fact that he has provably (in court!) lied about stuff like this, repeatedly, to the point of the SEC slapping a minder on the guy's tweets for a while.
Don't buy shares in his companies if you don't like their business plans or believe their assumptions. Use your own judgement, create your own models, make your own assumptions.
Aww, twinsies!
> It's very normal for someone to value a planet or other celestial body in terms of the value of the minerals or other resources on that body.
I don't think anyone has really had to value a planet yet.
(I'd assert Earth is at least as priceless as, say, the Mona Lisa.)
> Don't buy shares in his companies if you don't like their business plans or believe their assumptions. Use your own judgement, create your own models, make your own assumptions.
I have to live in this economy, unfortunately.
Sure but that applies to all of us with anything we disagree with. I think taxes are too high. "Blah blah do XYZ" I can just say "I have to live in this economy, unfortunately.". Ok.
Your argument is basically "in my opinion SpaceX is overvalued, therefore a lot of pump-and-dumps are going on and retail investors are buying them and losing money, therefore the economy is rigged" or something along those lines. Feel free to reframe it how you'd like but that's the gist of it. At the end of the day it's just not very coherent and I've repeatedly pointed out systematic reasons that it's wrong, I've pointed out how your valuation of any specific company is incomplete, and finally as you've tried to piece these things together you still have not made a consistent point and you've meandered around basically just complaining without really bringing anything to the table here. If SpaceX or any other company that is going to IPO is a pump-and-dump, show your work. At the end of the day it's just your opinion, and one in which most of society disagrees with.
> I don't think anyone has really had to value a planet yet.
Sure, but that doesn't mean it's not possible or that you can't actually value the resources and minerals.
> (I'd assert Earth is at least as priceless as, say, the Mona Lisa.)
I'd mostly argue the same, but what something is worth is mostly just an opinion.
If Oracle is highly leveraged or betting the farm on AI, then their credit worthiness goes down.
Alternatively, if money floating around to make loans is drying up, companies have to offer better terms to attract the dwindling supply
Those are intrinsically linked to ORCL equity. ORCL needs an ROI to service their debt.
There are different ROIs which are not the same, even if related.
In what sense?
This may be related to the commonly-held fallacy of "cash on the sidelines". Cash is always on the sidelines. Cash is not created or destroyed by buying and selling stocks or bonds. Cash is simply handed from one party to another, but the cash has to be held by somebody.
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.
Downgrade of credit worthiness is different. That depends on how leveraged the company is
All that to say: I had to move my focus around a bit and re-read "...pumped into AI buildout." several times, because I thought I was reading Ed Zitron :D
That's not a good sign and it's a blatant red flag for the market
It's worse than that - I believe that Oracle is one of the (many) companies right now that, if their AI experimentation fails, will stop the music, and everyone will be running for a chair.
Oracle is one of a few foundational components in the circular-investing group of AI companies. If they fail to make their commitments they're the first domino to fall.
A few puts on SPY dated a year or two out?
I dunno.
"The market can remain irrational longer than you can remain solvent"
You think the hedge funds selling SPY options don't have this priced in already? Of course, you can still make money on this bet, just like you can win money at a roulette table, but unless you think have some special insight that hedge/quant funds don't have, buying options should be negative EV.
Of course not, but it is a hedge, is it not? What would be your preferred hedge in this scenario?
I’d argue that it is very normal for hedging to be giving up expected value in return for a reduction in volatility of returns.
If you have a lot of exposure to the market already one could say not buying the option is more akin to roulette.
If you buy a put you are making a bet that realized volatility will exceed implied volatility. This may or may not happen and there’s no way to predict the future.
There are almost surely severe bumps ahead for the AI space and that will likely spill over into the broader market. But unless you’re retiring in the next few years don’t worry about it. You can’t time the ups and downs and the only proven strategy is to just keep investing in a broad indexed portfolio and just ride out. You’ll take a short term hit but also end up buying on the dip because you don’t stop investing.
(As for me, I'm just hedging my rhetorical front lawn.)
But that's not what they said?
>> I didn't get to participate in much of that
In that case possibly go with something global; in the one recent period where S&P500 was pretty much sideways for 10 years, MSCI World, say, did somewhat better. If the wheels do fall off for the AI bubble, it'll probably hit the US market harder than others.
_Within reason_ (you probably don’t want an index that has literally every stock in the world, say), broader indexes are generally less volatile than narrower ones; must downturns are at least somewhat regional, and sectoral downturns hit some regions harder than others.
Wouldn't it be wiser to get out of the market into fixed rate assets like government bonds?
I just hope the companies aren't considered too big to fail. Bailing them out would be a bad idea.
https://www.openmarketsinstitute.org/publications/no-bailout...
They will be. When the SHTF, you'll see Rubio in the room^H^H^H^H circus tent, sitting right next to Bessent, arguing that propping up OpenAI is as much a national security interest as bailing out GM was.
#2: What I've done so far: Haven't bought stock in a year. Have moderate short positions on Palantir, SpaceX, and Tesla. Have big short positions in the most popular Quantum computing companies. (Scams IMO). I have sold most of my positions ("profit taking"?) in stocks which have gone up a lot in the past year. (Nvidia, Broadcom etc), and am no longer using margin; about 1/3 of my brokerage value is now "cash", generating ~3% interest.
Never buy derivatives as a non institutional investor.
Most ppl are better off KISSing and lowering risk by selling equity for fixed income.
What? Absolutely not.
However! If you don’t want to learn and want to get rich quick instead, stay away.
At the same time, one can make financial decisions based on risk rather than longterm expected returns.
For instance, I'm happy with fixed income yields rn.
What would scare me is losing a big chunk of my portfolio in a downturn, exactly when I'm also most likely to lose my job.
There are a lot of failure modes. The dot-com bubble looked obvious in 1997; it popped in 2000. Anyone shorting in '97-'98 was carried out on a stretcher before being vindicated. In fact 2000-2002 fell in three brutal legs over two years, and anyone who leveraged up after the first 25% leg was destroyed by the next two.
which target date fund exactly? You can increase risk/reward buy choosing a target date fund far in the future or you can reduce risk/reward by choosing a target date fund closer to the present. The point of those funds is to gradually reduce your risk as you get closer to your planned retirement date. I moved my 401k into a target date fund about +10 years from my planned retirement (I'm 50). So a little bit on the risk++ side but not much.
https://workplace.vanguard.com/investments/product-details/f...
You want to search for the chart at "Allocation to underlying funds (actual)"
The AI crash is about stock market indicator ratios matching those that preceded other major crashes. That's what got me spooked. I don't want to be heavily invested in those companies when/if something bad happens.
> The AI crash is about stock market indicator ratios matching those that preceded other major crashes.
The way to put faith in such indicators is not (only) by looking at prior crashes, but by forward testing them. Over the last decade, it's been common for me to hear a sentiment like yours: "Indicator X has always resulted in a serious downturn in the past, and we're in X territory now" - and no crash ensued. Over and over again.
Find me an indicator that someone back tested, and then also actually predicted a real crash (with zero false positives). The cost of even a single false positive can be huge. Ask the guys who pulled out (or sold their houses) when COVID struck.
Don't become the person who predicts 7 of the last 2 recessions.
As someone who had early PUTs against the obvious industries (travel, hospitality) - what I didn't foresee was the insane amounts of government liquidity poured into the markets.
They did it in 2008 as well. Although the amount in COVID seems insanely high, back in 2008, $700B was insanely high. People couldn't believe the government would spend that much to keep the economy going.
The real question is:
What else are you not foreseeing?
I generally consider timing the market such as this to be a fools errand, but if you're going to do it you need to have a plan beforehand and follow it. A target date fund does exactly this with allocations.
It took 17 months for the 2008 crash to reach bottom.
For the dotcom, the market peaked in 2000 and reached bottom in 2002.
Timing the bottom is hard - plus emotionally nobody is keen to invest so you'd need to be contrarian too.
but it is possible to do safely. i’m a few decades in now
A friend of mine and I go out to lunch every 3 months and talk about, among other things, investing. We've made a trope of it, calling out the people who are predicting an imminent market crash every time we have lunch.
I'm not saying that it doesn't look like it's going to crash, but I'll also say that there's also a very sizeable downside potential for getting out of the market.
Most researchers have shown that attempting to play the market is likely to fail in the end. Set it and forget it. Ride the wave.
honestly, if you're >= 10 years away from needing that money (retirement or whatever) then the best hedge is to ignore the news and just keep contributing to your investment as always. I got caught up in a couple moments (tarif drama April before last was one) where i panicked and sold and then it only took a few months to get back to even meanwhile 18% of my capital gains were now due to the taxman. I wrote a check to the IRS for 10's of thousands for no reason except over reacting and ignoring every financial advisor's advice.
if you're going to need your investment money within 10 years then you need to get advice on how to start reducing risk (and therefore reward) because you don't have time to survive and repair from a crash.
Assuming you are the average person, and not a financial professional, using actual financial hedging instruments properly is unlikely, and far more likely to just increase risk and lower expected return.
A realistic way for an American citizen to reduce risk in the current market is to have a globally diversified portfolio that under-allocates to the US.
> market
These are two different things.
Because there are instruments that make market exposure easier, doesn’t make market exposure correct 100% of the time.
Yet, even now, Fable is able to do the work of 4-5 engineers when used by a single senior engineer. Teams can and will shrink.
Look at all the production and advertising companies switching over to Seedance. I know ad firms bidding 1/4th their typical contract price (pharma, P&G, etc.) and winning contract after contract.
This isn't dotcom "dark fiber" before demand. The demand is here now, big legacy firms are just struggling with deploying it. Nimble small teams are making a killing.
It doesn't matter to investors if OpenAI or Anthropic can build AGI if a year later 10 competitors have similar models and eat into the revenue. OpenAI and Anthropic needs years, if not decades, of significant market dominance, post-enshitification, to justify their investment spend.
> Everyone in the tech and media world is dead set on this being a bubble.
is completely orthogonal to this:
> Yet, even now, Fable is able to do the work of 4-5 engineers when used by a single senior engineer.
The industry being in a bubble or not is irrelevant to the tech being good or bad. The dot-com bubble popped (and was a bubble) even while the tech was fit for purpose.
If that's true or not, it's a bit irrelevant. Maybe teams won't shrink because of Jevon's paradox, or maybe tech debt will catch up.
But it doesn't matter because the people calling this a bubble mostly believe that the companies burning money cannot have the return on investment needed. This can be for a variety of reasons, but my favourite one is just that open source AI models are good enough, cost a fraction of what the frontier ones do (with predictable costs), can be fine tuned, and can be relied upon (no orange tweet banning your acces to the model you've been using). So for me OpenAI and Anthropic will really struggle to merit their valuations.
And then companies like Oracle are just a dumpster on fire. GPU hosting is a commodity business; expensive one, for sure, but there's no way in hell they'll make actual returns on the money burned with zero moat. And things are even worse when you consider the political involvement of the CEO and his nepo baby, which can easily burn good will.
qemu definitely won't do that out of the box, so, yeah, VirtualBox is better than qemu there. But I bet there's a fancy-pants GUI out there that has an import wizard that will handle that for you.
[0] <https://www.virtualbox.org/manual/topics/storage.html#vdidet...>
Vbox has the desktop experience. The "guest integration" stuff and whatnot. If you've used it for years, familiarity.
Quite possibly. I know that it's what Openstack uses for virtualization.
> ...to interactively step into...
Sure, running on an emulated CPU can be very nice.
> ...like as something part of a distro build chain to allow non-cross-compilable packages to be built for ARM on x86-64...
This sounds like it would be incredibly slow. As in "It's better to just buy some inexpensive ARM PCs" slow. I know that GCC and Clang can cross-compile just fine. It looks like Rust cross-compiles, and I think Go does as well. Do you know of major tools and/or languages that don't cross-compile?
Nvidia owns all the chairs, and they’re letting other companies pretend to for a while, but if it all falls apart the backstop to the collapse will be nvidia.
Much of their current debt fuelled expansion isn't singular to AI. The circular narrative ignores this.
Frankly, their forays into dubious financial engineering and investments are expected at this point.
Is Meta even in this race anymore?
If you're selling deterministic output, just use traditional code. If you product is inference, it has to be the best inference. This becomes more apparent when you bounce between powerful models and smaller cheaper ones, the cheaper ones _feel_ worse to use.
Meta and Microsoft both are also significant makers of GenAI models that are public, though neither has a big tentpole LLM line that they sell access.to commercially like OpenAI, Anthropic. Google, SpaceX, which I infer might be what you mean by major model maker.
What does Microsoft have?
Not sure SpaceX counts. Nobody sane uses Grok. It's untrustable due to reality-distorting political bias training, and it's strongly associated with CSAM production. Not what you want in a reliable corporate utility.
This story has been playing out for years now, and reads to me like the market simply recognizing that Oracle is not in the same business as it once was. It could succeed, wildly, at this new thing, but its risk isn't going to be valued based on the business it was 10 years ago.
Oracle is in a weird shape.
The problem in this market is that too many players are trying to play a winner-takes-all angle.
For the companies that pull it off, it could be very lucrative.
In a real market we’ll get a couple of big winners rather than one, but there isn’t enough room for all of these moonshot efforts to land.
I don’t see the whole thing coming crashing down, but I do see a consolidation coming that leaves some companies in a very bad state.
https://www.forbes.com/sites/jonmarkman/2026/04/06/oracles-m...
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 on them.
I'm guessing they don't care if actual business gets caught up in that because from their POV actual business comes from an account manager, and self-serve is just them cargo culting AWS/GCP
Uh, good luck guys.
CrowdStrike and Uber
> Hetzner
I don't know of any upper market EMEA customers on Hetzner. I've met Scaleway, OVHCloud, and even STACKIT users but never Hetzner.
Of course, when your “customers” are just self-dealing, that’s also not a great sign.
Any hosted service can be bent into the shape of a cloud. Large parts of Oracle Cloud balance sheet is probably just hosted PeopleSoft and similar.
They have this in common with IBM which, at least on paper, have a large cloud business.
Many companies use OCI for their Oracle DBs, as I believe they get some sort of discount when run this way.
I'm skeptical Oracle fits into the wider SaaS business category vs enterprise sales.
Then they terminated my free trial early with no explanation. I tried to add a payment method again and it didn’t work.
It turned into a bigger joke when Oracle sales people started emailing me to ask how my trial was going. They must have been given a list of email addresses and no information about the accounts. I would ask them for help getting my account unlocked or adding a payment method, they would send me emails for a couple weeks saying they were looking into it, then they’d ghost me.
Then a month later a new sales rep would email me and start the process over.
I checked Reddit and there were dozens of stories with the same experience.
I hate Oracle with a passion for everything they've done throughout the years, I hope they burn in hell. Of course I don't want that for most of the people working there, but those making the decisions? Kindly go the way of your cloud and vanish from relevance.
Wouldn't want to be negative at a time like this.
What does that tell me? Just one of many things about the prospects of the deal still happening. That one in particular says to me they won’t be deterred. Bond rating may suggest the opposite. Lots more complexity than those two things but “fun” to speculate.
That's quite the coincidence.
I think he is wrong when he says AI is useless. I agree that it's far from being as useful as assholes like Amodei claim it is, but it clearly has use cases.
Then again, that is the weak part of Zitron's argument, and laughably the only thing his critics like to engage.
When he brings up the bonkers economics of AI, and how absolutely unsustainable it is, his arguments are very solid. I am still to see one good counter to him there. It's not like he lacks haters who could try.
that said, I also used to work in environments where even Claude Opus tripped over itself when trying to untangle its own slop. that made me looking forward to AI going bust and folding back into tab-complete. that bubble revealed a lot of projects that always were slop, even before AI. the LLM policy became a great proxy of the quality standard the codebase and the community upholds itself to
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 some AI crap.
They're the only player in the Identity-Document-Email-VM-Storage space that's even remotely unified.
G. A. H.
edit: Y'all downvoters want genAI in your cars?!
For the hyperscalers, there is an ease of remaining in the Azure/AWS/GCP fabric from a data provenance perspective, particularly for regulated industries or large, risk-averse enterprises. There's also, of course, a certain network egress tax in most cases.
Their new endpoint even promises zero operator access [0]
[0] https://aws.amazon.com/blogs/machine-learning/exploring-the-...
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.
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.
I dunno, hey. After all, I can't distill my competitors datacentres :-)
No value judgement. I think this is a fantastic strategy.
Now back to the conversation, do any of the gold miners have a moat? Or is this a race to the bottom?
Only thing holding them back is fab capacity which nVidia keeps buying in bulk to keep them small.
Just how much of dev ux do you need? A foundational library, of course, but as the AI companies keep saying, their models can vibe-code what's needed for those chips anyway.
We also use it as a programming tool to design software, ingest logs and do analysis, find patterns in data, etc.
We bought it because we were burning through too much cash with Claude and Gemini.
Nvidia's entire business is dependent on Google not being able to make TPUs fast enough.
Unlike AMD, Google can actually ship software. AMD has never shipped good software other than drivers (maybe) in the entire history of the company, including both ATi's history and true AMD. They have always relied on Intel to provide the software.
I am about to spend $20M, if I buy anything other than Nvidia, and things go wrong, I am going to get blamed, and if things go right I will get no credit. This is why AMD is making no progress outside of very narrow cases and supercomputing.
This is the leap, nobody really wants to front a model for someone else. If i build an agent, or a service that requires a model, I'd prefer to push the model onto someone else, preferably at no cost. This is a leap as I'm sure right now, most people / businesses are thinking actually i do want to own / front the model.
However, if you accept the leap the easiest way to do this is to make the model the users problem.
From a business point of view that makes things really easy, from a customer point of view, they simply have to accept whatever their vendor of choice is pushing down their throats.
So as a business I build for whatever model Google makes available to android, and whatever model windows bundles, and whatever model Apple bundles, and, excluding the long tail of Chinese vendors and Linux (sorry, its always left out) and that's it, problem solved, and the customer picks up the tab for the tokens
Vendor lock in cannot happen, or you're bankrupt.
That's a losing proposition for any token provider - it's expensive and slow, and when you're done everyone with money to rent a last-gen H100 is going to distill your "closed" model anyway.
The specialized models for targeted verticals being discussed may well not be sold by tokens, but instead be behind the scenes powering dedicated packaged solutions where the customers don't have raw access to the model. Token providers still won’t have a moat, but AI isn't just selling tokens.
But I switched from ChatGPT to Claude 3 months ago because my account was down for like 6 hours. I haven’t used it since. It’s too easy to switch away from chatbots on a whim. There is no moat for that.
But... Anthropic doesn't have a moat. It's clear at this point that SOTA models are not a moat, and Opus 4.6-level (or GLM 5.2) is sufficient.
Google, though... they own the entire vertical, from the semiconductors to the end-user software. They may have a moat.
It’s not much of a moat, but it’s more than a lot of orgs have.
But as they have repeatedly pointed out, creating software is almost zero-cost now, so software cannot be a moat.
After all, all of the Claude software can be vibe-coded by any competitor; that's the dream that Anthropic has been selling anyway...
I see a lot of comments (incl 2 sibling comments) are always discussing whether there is a moat on AI. We agree there is no technical moat, there is nothing that Anthropic or any other AI lab could do that wouldn’t be quickly offered by other competitors too. However, _market penetration is the moat_. The deeper Anthropic is in relationships with orgs, the higher the cost of switching. Sure, for an individual it’s a 2-second job, but for a business it’s actual work of changing permissions, provisions, updating vendors etc. Nothing catastrophic but still real work, implying that Anthropic would need to drop the ball significantly to be swapped out, and wouldn’t be just because there’s a competitor who does everything kinda the same for kinda the same price (or slightly less).
Moat can be in execution and not just in technology. McDonalds has no specific burger-making technology that no other restaurant can acquire, what they do have is a well-scaled execution. Sure, there are competitors, and sure there are new comers to the burger space with different recipes (e.g. smash) but that doesn’t mean McDonalds is going under. Market penetration is the moat.
It's the same reason companies will pay for GSuite and O365 subscriptions concurrently because a handful of departments refuse to give up their desktop applications and others have Excel-based workflows that do not work in Google Sheets and do not care enough to learn Python or find someone in the company who can write a better system.
There are competing definitions of what intelligence even is, and the one that I find most striking is from Francois Chollet which is that intelligence can be boiled down to skill acquisition efficiency. This type of definition makes intelligence more akin to polishing a ball than growing a watermelon.
The superintelligence doomers warn that the watermelon is going to start growing exponentially and crush everyone. But what might actually be happening is that we are not growing a watermelon but rather polishing the ball until its really smooth and shiny. There's a point where you can get it to micron levels of polish but for most tasks (white collar text domains tasks), it's smooth enough! You will be able to go to the ball store and buy a low cost made in china ball for most tasks.
The real challenge is actually branching out domains and modalities to tackle things like blue collar labor. Over time, white collar work automatable or able to be made hyperefficient by LLMs will see LLM commoditization.
and they STILL went out of business because they over-estimated the demand for their shitty rails they built to the middle of nowhere. Same with "AI."
When you are already trusting 100% of your data, and computing on that data, to someone like AWS, it doesn't meaningfully increase risk to use an additional service, even if it is an AI service.
Anthropic is renting compute from a competitor, that also is known for their blackhat business practices.
And I've seen first hand hyperscalers go to extremely large lengths to eradicate any use of Oracle (which mainly comes in these days through their acquisitions).
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.
There's still a massive compute crunch, I know the opencode guys had been struggling to get capacity, Claude effectively lowered it's limit till the SpaceX deal, Google is struggling.
https://x.com/thdxr/status/2024539643673211054
https://www.anthropic.com/news/higher-limits-spacex
https://finance.yahoo.com/technology/ai/articles/ai-demand-o...
They'll give a bribe to Trump, they'll offer up 5% of the stock to Chairman Trump as the People's Stock now that the US is basically a bizarre oligarchy form of communism, and Oracle will be declared a state enterprise that cannot lose money.
The super rich simply do not fail, and they utterly control every aspect of the US now, exactly as the people apparently wanted.
Americans are in a state of profound denial, but things are about to become very real, very quickly.
A little bit dangerous for a US administration (any US administration) to do a bailout of unloved companies just before a midterm.
Not that Trump won't do it, just saying that he'll think twice about it if he wants to hold on to the power that the American people have given him. It's one thing to boast that he can shoot someone in the street and the public won't care, quite another to tell the masses that he's funding their upcoming unemployment using their tax money :-)
The Iran war is unpopular, but they did it anyway.
I think it's interesting to analyse Xi, who unlike Trump is aware that the US is failing and that most likely China will dominate a future global economy, but who must by now be wondering what an inevitable decline looks like for China. Can he postpone it somehow? Are its seeds ultimately in something he will do, or worse has already done? That's not a happy thought is it?
Meanwhile the US's "supposed upcoming ending" puts them in a better position than the UK was in many different categories. It still has massive resources, amazing talent and a citizenry with an "ambitious" can do attitude vs the "tall poppy syndrome" of the UK. Its difficult to argue that there is an exact end date thats occurring now. To say its all over and that there isn't a second story coming seems premature.
Re China: This is a country that has overexpanded in infrastructure which will come home to roost sooner or later, has a terrible demographic structural collapse looming with no realistic way to correct(unlike the US which has options to correct), has overinvested in so many industries that they are experiencing massive (25%) youth unemployment with deflation occurring. They have serious problems coming in the next few decades.
Man, we've been hearing this same tale for decades. China is always at the edge of some massive collapse any day now. Meanwhile the US goods trade deficit is literally worse than ever, the deficit is $2 trillion dollars and the debt is consuming more and more of federal income just to maintain. The US equities market is a giant inflated balloon and no one even pretends to rationalize it anymore. Leadership in the US is now banana-republic level corrupt, in the open and shamelessly. Yeah, this is not the time to be throwing rocks.
> has a terrible demographic structural collapse looming with no realistic way to correct
I mean...not only is China becoming a pretty desirable country for many of the world's residents, they could...have more children. If China decided to turn the corner and get back to maintenance levels, I 100% believe they could do it almost overnight.
The US? Yeah, the US is a free-for-all hyper-selfish, short-sighted end-game right now.
Yeah but my comment "This is a country that has overexpanded in infrastructure which will come home to roost sooner" is just common sense. What happened in the developed world will eventually catch up China. Every bit of 'matter' in an empire has a cost: the cost to push back entropy. Their strategy of just rushing to overbuild without thoughtful planning makes everything look wildly impressive today but tomorrow is different and this story has played out in every single country in existence before. Everything has to be maintained and that long tail is something every country deals with. What make you think China is some special animal?
>Meanwhile the US goods trade deficit is literally worse than ever, the deficit is $2 trillion dollars and the debt is consuming more and more of federal income just to maintain. The US equities market is a giant inflated balloon and no one even pretends to rationalize it anymore. Leadership in the US is now banana-republic level corrupt, in the open and shamelessly. Yeah, this is not the time to be throwing rocks.
Now you are conflating two different ideas: infrastructure vs investment. Lets address them separately. Yes the US equities market is overinflated. Meanwhile no one even wants the Chinese currency. Not even the Chinese. Obviously China can live with this because they have the large market and manufacturing prowess to fall back on but long term the fact that no one trusts them enough to invest in their country will hamper the growth. It goes back to my original idea: Maybe the US does not need to shine, it just needs to outlast China to buy time to slowly fix itself over another century. China winning the race is not a foregone conclusion.
>I mean...not only is China becoming a pretty desirable country for many of the world's residents, they could...have more children. If China decided to turn the corner and get back to maintenance levels, I 100% believe they could do it almost overnight.
What are you smoking? China is not welcoming to immigrants. China has very strict scrutiny of applications for Chinese citizenship. Unless you are married to a Chinese citizen, are a senior scientist, or make significant contributions to China, you can at most obtain a Chinese permanent residence permit, not citizenship. Looking at the most recent numbers of permanent resident it is less than 10,000 total people...in a country the size of China it might as well be a rounding error.
The time to have more children was 18 years ago. Not sure if you know but it takes 18 years to go from birth to adult. The point of having people is so they participate in the economy, they become the workers, the consumers, and the defense. A country is nothing but a bunch of people. No people: no actual country.
The crisis is locked in now: look at the population pyramid: https://www.populationpyramid.net/china/ The "peak" of their population was 2021, since then their population has consistently declined: old people dying off and not being replaced by young people or immigrants. By the 2100 unless they figure out how to grow humans in a factory they will have lost ~800 MILLION people!
Now look at the US: https://www.populationpyramid.net/united-states-of-america/2...
As close to perfect growth as possible. No over representation of any group. The US has had this blessing in that they could cheat and attract enough people as immigrants to make up for any decline in native births. It gets even better! Not only do they get people at their prime age they didn't even have to spend the resources to raise the person for the first 18 years of their life, some other sucker country did all the work and the benefit goes to the US. They only let in as much as they need and it forms a perfect pyramid. Stable growth and stable population sizes. You can argue that maybe Trump has started to derail this but again...you cannot compare China to the US at all.
You think there will be a free and fair election? Do Americans realize that Trump has openly floated pardons to anyone in his circle? What do you think all of his "every election that I/we don't win is corrupt" rhetoric -- dangerous, grossly unacceptable, anti-democratic horseshit -- is all leading to?
Trump has done brazenly criminal things, repeatedly. He is pardoning anyone who bribes him. He lies with every utterance from his garbage mouth. He doesn't even attempt to pretend that he's delivering his promises now. Congress has completely abdicated any and all responsibility. His entire administration is just shockingly, unbelievably incompetent, from Epstein-Island Nutlick, to Kegsbreath the ChatGPT warrior weakling dipshit.
Remember how outraged everyone was about Hunter Biden selling a painting, or Pelosi trading stocks? ROFL, how bucolic and corruption-lite that is compared to having a crypto-rug pull, inside trader and his family of halfwit runts running around destroying the US for their own family fortunes.
This Thursday evening is going to be eye opening for a lot of Americans that have tried to delude themselves into thinking they're getting lulz for a couple of years. It is shocking that people still pretend you're a democracy, or even capitalist for that matter. The US is post capitalism, and the plutocrats have decided to be done with this whole democracy farce.
It remains shocking that Americans would re-elect this garbage racist self-dealing criminal imbecile again. And I would like to say "you get the government you deserve", only the US is now a worldwide menace so the entire planet will suffer from this idiocracy.
Trump is currently having an armoured facade installed on the front of the Whitehouse, alongside the very well documented bunker complex. Do Americans really not realize what this is actually for?
Life is good, I guess.. Java people should start sweating.
Levered free cash flow (LFCF) is the cash remaining after a company has paid its debts and operational costs. Oracle has 167.43B debt. $43 billion in last fiscal year.
Google, Meta, Microsoft, Amazon will be fine if AI bubble bursts. Oracle will be among first to go down in flames after OpenAI.
Anyway...
They'll be fine.
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.
> Reliable Agent copies thinking at 13x human speed
Still waiting for a reliable agent to think at any speed.
it only "works" if the government actively does everything in its power to support the boom. No restrictions on new power sources, on pylons and transformers, on new factories to make power sources and compute, on data centres.
This was never going to be the world we live in.
Still surprised by the admin actively punishing politically incorrect power supplies (renewables) and then starting a stupid war with Iran, but even without that nonsense, we were never going to see the US do a command economy pivot, and even if we had something would've broken like it usually does with noobs (and even most politicians are noobs) trying a command economy pivot.
That site is too funny :-)
> [mid-2026] But China is falling behind on AI algorithms due to their weaker models.
> But China is falling behind on AI algorithms due to their weaker models
They wrote this shit in April 2025. And they put their names on it. Beyond hubris.
The assumption that this process can be “distilled” from written word is completely insane. I’m not sure how people trick themselves into thinking it’s even remotely possible.
They are just rich. And also assholes.
Same thing that drives all these execs of large companies - naked greed!
"If only we can fire all workers, imagine how profitable we'll be!"
They are attempting to set civilisation on fire with the intention of being on top when they no longer need humans.
Oracle holds 15% & is the hosting provider, Silver Lake has a stake, MGX (UAE state backed firm) owns some as well.
But Oracle still manages the content recommendation algorithm and the infrastructure so I'd argue they still have the biggest impact on the platform.
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?
It’s like saying a new apartment building is “profitable” because the monthly income covers the monthly running costs, but ignoring the giant mortgage that covers the cost of building the building. That thinking is a good way to go bankrupt in real estate and a good way to go bankrupt in AI.
Or that it’s all hearsay and no one has released financials yet?
That's the best possible interpretation of them.
The other possible interpretation is that they are manipulating the numbers (that they have to show to investors) and inference isn't actually profitable either. If they are not manipulating the numbers right now, both companies have a serious case of uncontrolled operational costs that they have to solve too.
Correct. Because a less charitable interpretation will squint at their marketing spend and wonder if they are just sweeping a lot of their expenses on categories they don't belong to make their business look less bonkers to those that prefer to not ask the ugly questions.
I'm personally on the team that think it's honest. But then they have to explain why their marketing numbers are so weird.
To put it in perspective, that’s about the combined campaign budget of the Trump and Harris campaigns.
I would expect to be seeing a lot more openAI ads than I’m seeing right now. And they would be everywhere.
My less than charitable guess is that the leaked financials is a piece of fiction intended to make inference not look unprofitable.
What about retention though? Or upselling to higher tiers?
I would question where they decided to draw the line… because it’s a grey area.
Also, that certainly includes a lot of money for making all of the media and management training and consulting talking about them. Teams to talk about it on social media, agreements to increase its impact on visibility algorithms...
> And they would be everywhere
How are you not seeing LLM companies ads everywhere?
That's why it's so hard to get a residential mortgage, for example. It's more of a partnership, with more mutual vulnerability, than most people think. Same thing seems to be true here.
Given what happened with xAI’s excess capacity lease to Anthropic, and Meta’s noises about doing the same, seems likely that the demand for inference will continue to slope upwards for a while. If I’m Oracle, I’m not worried about being able to utilize the data centers I’ve built for some price, almost certainly a profitable one.
I’m guessing, though, that Oracle made their capital investments on assumptions of a higher price & return. Possibly because it wasn’t clear when these decisions were made how much competition OpenAI would have at the frontier.
I don’t think this math is all that hard. Capital markets have everything they need to start to figure it out, most especially a year or two of history to project forward.
When dealing with sophists you have to pin them down on specific points and prevent them from shifting the conversation.
So please explain to me how this is a bubble especially considering that most of these feature are based on llm and not even on how we primarily interact with the world ...visually. the bubble will happen after I can turn on a webcam and the program watches me draw or do a golf swing and gives me realtime tips or i put on some ar glasses and it coaches me at work .
The amount of compute needed for graphics real time info is astronomical compared to llm . We are so far from the top of a bubble. The problem with ai in my opinion invest with the mindset that what goes up must come down and if it went up big it must come down hard soon. That's not a rule of nature or anything somethings are bedrock and keep going up. I'm sure when electricity was invented and reached every house maybe some people thought the bubble was over but we keep needing more and more. There is zero evidence now that we will need less ai compute.
I think it's logical to be skeptical of chatgpt IPO etc but the sector as a whole is crushing and maybe because of fear will have some hiccups but will certainly prevail for a long time imo
LBMs will eat robotics, and that alone will eat a double digit percentage of labor.
If you were around about the time of the Dot-Com bubble, you can better make sense of the saying.
The web never stopped being useful, it was the ridiculous and speculative valuations of companies, and outlandish claims that couldn't sustain themselves and eventually 'popped'.