I can't figure out whether we're about to become one of the biggest winners in AI or whether this whole thing is going to blow up in our faces.Mgmt keeps talking about OCI growth, AI contracts, partnerships with NVIDIA, OpenAI, and everyone else. The numbers look good on paper but internally it's hard to reconcile all the excitement with what we actually see day to day. OCI still has plenty of issues, and I don't exactly hear coworkers talking about how great our technology is compared to AWS or Azure. My biggest concern is the amount of $$$$$$ we're committing to all this infra. What happens if AI demand slows down or these contracts don't translate into the profits everyone expects? Knowing Oracle, I wouldn't be surprised if employees end up paying the price through layoffs and cost cutting. Anyone else feeling this way?
17 replies (most recent on top)
OpenAI is simply an asset too important for the government to let fail.
This statement is simply not true and is perpetuated by who exactly? The same tech media who pumped the market's expectations of AI to unrealistic levels.
Hint: using that statement makes you sound desperate.
@zu is obviously a magical thinker.
@zu is obviously a magical thinker.
So you believe that OpenAI will be able to pay Oracle the first $85B of their RPO to Oracle during our FY27? I'm interested in your rationale as to how this will happen.
And you believe OpenAI will do this as the cost of capital is increasing, along with the political questions in Texas, Iran, etc?
And you believe OpenAI will do this despite not being close to profitability, with an operational burn rate on the order of $100 Billion a year?
And you don't mind the fact that the financial community at large views Oracle as one of the biggest risks in the AI run up? And that Oracle's cost of debt is high, and their debt is barely above junk? And you don't mind the fact that insurance on Oracle's debt (Credit Default Swaps) is hi, Hi, HIGH?
Since you are long on ORCL why not start buying the dip now? Load up! Maybe take out a 2nd mortgage on your house while you are at it.
I am quite confident it will work out. OpenAI is simply an asset too important for the government to let fail. LE is extremely connected both politically and in the tech space. Oracle customers are also strategic US assets. Their ERP systems aren’t just going to magically disappear.
The underlying problems are what are so glaring and cost oracle so much $$$. Deployments for example -- Oracle stinks at CI/CD...sure, it's getting better, but how do you run a cloud for years without any coherant CI/CD? Manually sequencing regions, guardrails established 3 years after go-live. Deployments that can take 2+ weeks across the fleet. And that's not even touching on the massive tech debts that some leadership has chosen is "cheaper" to just hand-jam instead of actually spending the time to fix it. I think it's only a matter of time before AI causes a really massive outage......because who really has time for code reviews and testing, right?
@hw This might be the most underrated comment yet.
Every AI query that is serviced, every single one of them, loses money to the service provider. Nobody is, or is able to, charge the real cost of providing the service, let alone to make a profit.
There is no economy of scale; as you get more users, your costs ramp too, along with the losses.
GenAI is very helpful, but enjoy it whilst you can, because it can't keep being given away for free.
@ds
I respectfully disagree.
There is very little chance openai will pay on their debt obligations.
There has been a shift by big enterprises away from expensive anthropic/openai tokens toward inexpensive, openweight, "good enough" models. Why do you think openai recently cut their pricing so drastically? (up to 90% wtf).
And re: anthropic's IPO... I can't wait until their first financial filing. If it hasn't all come crashing down before that, then it sure as fu*k will then and it will take openai, the neoclouds and oracle down with them.
Looks like there was a brutal selloff on Friday, many tech stocks took a bath including Alphabet and Intel because of the AI spending. Apple, who I've seen analysts were laughing at for falling behind in AI adoption, came out on top. Still looking for more information, but that's the general consensus I'm seeing.
it's up to OpenAI at this point, if they pay on time.
it may pay off, i'd say 60% on Oracle not going bankrupt, and 30% on winning big time
Anything "HAS to include AI" is a foregone conclusion - there was never any discussion about this to logically come to that conclusion. Before 2024, there was healthy skepticism. The cartel didn't want to wait forever, so they made it a must-have, and then, "Who will pay for it?" is asked rhetorically. Then, the cartel collects from the rest of us to enrich themselves with real assets while showing people the fake stock markets. They'll bring it down so that you don't stand a chance to get into their club.
Given that the media is finally reporting on some AI financial reality versus pure hype, people are beginning to realize that the revenues simply are not there. IMO OpenAI and Anthropic's inabilities to meet their debt obligations (eg to Oracle) will bring it all crashing down.
At this point they really have no choice but to follow through on the gamble. The debt isn't going away. The only hope they have is that they will generate the income that they projected. If the income doesn't arrive the debt will consume the company.
It doesn't matter if it makes sense or not technically. They are pretty much forced into it based on how the sector is going. Its a hail mary buzzerbeater that isn't necessarily thrown with any sort of accuracy.
Unfortunately, anything in the sector HAS to include AI in the pitch to get investors to part with their money. Even if its a half-assed half-baked attempt, it has to be there in the current climate.
It’s aimed at investors not customers. The latest product announcements are mostly irrelevant. No one is impressed.
Some people can never admit they are wrong so they double and triple down. They’re like gamblers at the craps table.