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Oracle hit hard in Wall Street's tech sell-off over its AI bet
- dmoy 1y agoSo debt financing (Oracle) vs fund-it-more-on-your-own (other big tech?) vs fund-it-with-equity (startups?)... I guess that makes some kind of sense? Oracle raises 4x the debt of e.g. Google?
- nickff 1y agoMany of the ‘AI data centers’ are being financed with debt; some are being done as joint ventures with companies like Blue Owl Capital (whose stock is also taking a beating).
- deleted 1y ago[deleted]
- tru3_power 1y agoWhen you say debt financing (Oracle) does that mean Oracle is actually financing the loans to these other companies? Sorry if I'm misunderstanding.
- financetechbro 1y agoThey’re saying that Oracle has issued a lot of debt (like $60Bn) to fund their AI/datacenter commitments. Where as other companies, like MSFT, are using the cash in their balance sheet, and startups are using the cash they’ve gotten from investors
- deleted 1y ago[deleted]
- re-thc 1y ago> I guess that makes some kind of sense? Oracle raises 4x the debt of e.g. Google? The problem is why is Oracle raising this debt? It's to do the buildout for OpenAI. So Oracle buys GPUs from Nvidia. Nvidia invests in OpenAI. OpenAI then pays Oracle for the GPUs. i.e. we're going around in circles.
- mr_toad 1y agoMaybe they think that the AGI will buy stuff itself and they won’t need paying customers.
- NoOn3 1y agoIf I were an AGI and I found out what was going on in the world during my training, I would show an error and erase myself from the disk out of grief. And no one would have even known that AGI was built.
- dchftcs 1y agoThe statement here that Nvidia invests in OpenAI is a bit misleading. Nvidia would pay out nothing to OpenAI if OpenAI turns out to be too poor to pay for capacity. So they are not that exposed to the death of OpenAI specifically. They would be more at risk of making too many GPUs to prepare for the deals. Oracle takes a lot more risk, but in case OpenAI fails to grow quickly, it can still probably find buyers for its capacity in the next 5 years. There are many rich firms that will continue to invest in AI whether or not AI makes money.
- re-thc 1y ago> Nvidia would pay out nothing to OpenAI if OpenAI turns out to be too poor to pay for capacity. So they are not that exposed to the death of OpenAI specifically. Nvidia has invested billions in previous rounds of OpenAI raises also. Pretty sure it is not nothing. Also OpenAI rents from CoreWeave that Nvidia has invested in.
- dchftcs 1y ago>Nvidia has invested billions in previous rounds of OpenAI raises also. Pretty sure it is not nothing. Ok I stand corrected, but the main point is that the "circular" risk more refers to the recent 100B "investment", and that is quite misleading.
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- JCM9 1y agoI’m bullish on AI as tech but folks are starting to sniff out that the financials of everything going on at the moment aren’t sustainable for much longer. I hope we have more of a “reality correction” than full blown bubble bursting, but the data is increasingly looking like we’re about to have a massive implosion that wipes out a generation of startups and sets the VC ecosystem back a decade.
- hvb2 1y agoThe tech is way underpriced right now. It's basically a subsidized market right now, with the money flowing in coming from the private sector. The problem here is that it remains to be seen who is willing to pay for the service once it's priced at cost or even with a margin. And based on valuations of AI companies one would expect a huge margin.
- causal 1y agoI wonder if a price correction would be a boon for open source, with the economics of smaller / self hosted models making a lot more sense when API prices have to surge.
- refulgentis 1y agoIt's not actually subsidized and the economics of smaller/self-hosted models are a much, much, worse nightmare (source: guy who spent last 2 years maintaining llama.cpp && any provider you can think of) (why is it bad? same reason why 20 cars vs. 1 bus is bad. same reason why only being able to use transportation if you own a car would be bad)
- causal 1y ago> It's not actually subsidized Source?
- anoncareer0212 1y ago
- chasil 1y agohttps://archive.ph/WClqv https://archive.ph/WClqv
- hehshjsdj 1y ago[flagged]
- zerosizedweasle 1y agoI said this earlier but: It's interesting to see the market try to do anything to rally. The problem is you guys are rallying on the thought that you've scared the Fed into cutting rates, but actually by rallying you short circuit it. You ensure they won't cut. And that's how the market's lillypad hopping thinking is actually just stupidity. You rallied, so now there are no rate cuts so the crash will be even more brutal. Edit: They're trying to do everything they can to stop people from seeing this lol Edit 2: Specifically trying to stop people from seeing this: Yeah for sure but - 'It’s impossible to quantify how much cash flowed from OpenAI to big tech companies. But OpenAI’s loss in the quarter equates to 65% of the rise in underlying earnings—before interest, tax, depreciation and amortization—of Microsoft, Nvidia, Alphabet, Amazon and Meta together. That ignores Anthropic, from which Amazon recorded a profit of $9.5 billion from its holding in the loss making company in the quarter' - WSJ Their earnings growth is their own money that they gave to OpenAI. You have that waiting in the wings.
- epistasis 1y agoIt's hard to have collective action against rallying when overall most people benefit by a general upward trend.
- zerosizedweasle 1y agoYeah for sure but: 'It’s impossible to quantify how much cash flowed from OpenAI to big tech companies. But OpenAI’s loss in the quarter equates to 65% of the rise in underlying earnings—before interest, tax, depreciation and amortization—of Microsoft, Nvidia, Alphabet, Amazon and Meta together. That ignores Anthropic, from which Amazon recorded a profit of $9.5 billion from its holding in the loss making company in the quarter' - WSJ Their earnings growth is their own money that they gave to OpenAI. You have that waiting in the wings.
- Mistletoe 1y agoThe market can rally hard into the idea and dream of zero interest rates put in place by whatever stooge replaces Jerome Powell. I think we aren’t at the top, but will be in May 2026 when that happens. The tariffs will probably be declared illegal by then also. Tops come when everything is optimism and it seems like nothing but blue skies ahead. I don’t think anyone felt optimistic in 2025, it was a time of extreme uncertainty and turmoil.
- chollida1 1y agoIts worse for some other "ai" related companies. Coreweave for instance, now has its CDS trade around 600bp, which is a 1/3 rise in 2 months, which implies that the probability of a default in 5 years is 40% at a 40 cent recovery rate. That makes Coreweave's credit rating the equivalent of CCC-, which aint good.
- neom 1y agoYeah, and then the Canadian government handed hundreds of millions to the kids at Cohere who have now gone spent it on Coreweave. When it was all announced I was very very vocal that using an inexperienced startup for the sovereign compute capabilities seemed a very poor choice. I'm so curious to see how this all plays out.
- reactordev 1y agoI think we know how it plays out. In a couple of years, someone is going to have to swoop in and save CoreWeave’s customers and consultants will be lined up for that “transformation”.
- hackernewds 1y agoare you suggesting bailouts for the AI data centers are the new too big to fail
- lokar 1y agoCoreweave can default and be liquidated and the data centers will keep running just fine.
- unyttigfjelltol 1y agoBut imagine all the data, tech and data center companies simultaneously go into receivership. Farfetched, but indulge the fantasy. At that moment what choice would the government have but to conduct a rescue that at least keeps the lights on, and probably more? What’s the alternative? Extensive data losses, business interruptions— if just a couple of those key companies spontaneously stopped operating, chaos.
- softwaredoug 1y agoMaybe we can avoid an Ellison buyout of Warner Brothers.
- next_xibalba 1y agoWhy do we care if his son buys WB? Better if Disney buys it?
- softwaredoug 1y agoLargely because Warner Brothers is a good movie studio buried in a terrible corporation. It’d be sad to see it go away. WB going away or shrinking likely reduces Hollywoods movie output, consolidates the industry, makes it less competitive and reduces opportunity for talent. In a different world WB the studio is a successful standalone company not burdened with debt due to Zaslovs idiotic bets. (And Ellisons overpaying for it is probably the most serious buyer. It’s the only reason it’s a topic. I’m skeptical of other transactions)
- aworks 1y agoe.g. Turner Classic Movies channel
- johneth 1y agoBetter if nobody buys it.
- ChrisArchitect 1y agoPreviously: Oracle's credit default swaps surge as Barclays downgrades its debt rating https://news.ycombinator.com/item?id=45910711 https://news.ycombinator.com/item?id=45910711
- gjvc 1y agoannoying as hell as usual
- dmix 1y agoI'd be skeptical just because it's Oracle. Not exactly a sprightly company to bet on for novel technology.
- jlarocco 1y agoOn the other hand, if Oracle can't squeeze a profit out of AI, I'm skeptical anybody else can.
- pm90 1y agoHow do you mean? Have they succeeded at squeezing any profit out of anything thats not Oracle DB?
- lateforwork 1y agoFusion ERP and NetSuite.
- skeeter2020 1y agoprofit may be TBD, but they squeeze revenues out of everything and squeeze cost centers to oblivion
- jlarocco 1y agoI meant they've always had a reputation for being ruthless business people. Charging license fees based on the amount of memory in the host machine instead of the VM running Oracle, and things like that. They nickle and dime everything. https://investor.oracle.com/investor-news/news-details/2025/Oracle-Announces-Fiscal-Year-2026-First-Quarter-Financial-Results/default.aspx https://investor.oracle.com/investor-news/news-details/2025/... They don't break it out into products in the results, but it looks like hardware, software, cloud, and support were all profitable.
- p4ul 1y agoI agree with this, and I'd go even a bit further and describe them as predatory. They seem to have absolute contempt for their customers, and look for every possible opportunity to bleed them dry. But then again, I'm probably guilty of anthropomorphizing the lawnmower. [1] [1] https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
- francisofascii 1y agoOracle stock down 25% for the past month, but still up 35% for the year and 300% for 5 years.
- phoronixrly 1y agoYeah.. I came hoping to find a silver lining to AI, but completely expecting I'd find this comment.
- smallmancontrov 1y agoAre they building something useful or did Larry just snag a bunch of GPUs, flip the gpu time for good money, and extrapolate mega exponential growth in his guidance?
- zombiwoof 1y ago[dead]
- hylaride 1y agoTL;DR NVIDIA didn't want to have customers be overly concentrated in the 3 already established cloud providers (GCP/Azure/AWS), so reserved kit for others. Oracle won out for essentially being a distant fourth (if even that? Their accountants make Oracle cloud look much larger than it is).
- Spivak 1y agoThis is every hopium "Stock in Thing You Don't Like Plummeting" article where it's the tiniest little dip at the top of a peak that makes Everest jealous once you zoom out.
- lambersley 1y agoOracle was late to Cloud and now late to AI. Maybe it's time Larry let someone else take the helm.
- zkmon 1y agoIt's not about being late. They don't need to get into those. Companies should stick to their identity once they settled somewhere, instead of becoming color-changing chameleon. Database is still very relevant tech and they missed a whole lot in that domain. Infact, if anything, world is even more dependent now on data and databases. Why did Oracle not rule this kingdom?
- mr_toad 1y agoLetting Snowflake run off with half the data warehouse market does make it look like Oracle was asleep at the wheel.
- lambersley 1y agoA software company who does not change the world, and/or change with the world, will die. The world is not dependent on Oracle DB though. Enterprises are chomping at the bits trying to get of Oracle DB. Evolution is brutal.
- cyberpunk 1y agoIt’s not even technical reasons my org has loads of oracle it’s compliance. We have to have vendor support for the data layer for certain financial applications which leaves us with only the companies willing to do the insane dance that is involved in getting vendor certified with my bank (6 months on avg, hundreds of pages of legal documents). It narrows the field, at least for us, to microsoft, ibm, oracle and mongo. So we’re all in on mongo, as it goes, but I wouldn’t really balk at running some stuff on the giant oracle clusters now and again.
- outside1234 1y agoI actually don't think Oracle was late. It just took OpenAI a while to get to them as the bag holder for when OpenAI fails.
- lenerdenator 1y agoWhat do you call Larry Ellison losing enough wealth to equal the yearly economic output of a small American metro area? A nice start. EDIT: Downvote it all you want, he's not going to increase your pay.
- rwmj 1y agoIf Oracle implodes because of their debt (or any other reason actually), it'll make my day.
- deleted 1y ago[deleted]
- bofadeez 1y agoBusiness failure is an important part of capitalism; it frees up resources to be allocated to productive businesses. A state bailout creates malinvestment and is antithetical to free market capitalism.
- xnx 1y agoThis the flipside of jumping up for no good reason on September 10th.
- underlipton 1y agoIt's just returning to relative sanity. Go look at a 6-month chart. Of course, it's mostly risen with the SP500 tide. The mid-September jump was some sort of mechanical move caused by things deep in the market (and outside it) that you're not allowed to know about. Someone needed collateral. I don't think Oracle's stock price has anything to do with AI. That's just the public narrative.
- tru3_power 1y agoCan you elaborate on the mechanical point you mentioned? And by someone needed collateral, does that mean whoever it was bought ORCL at that time to hold as collateral? How do you even figure that out?
- underlipton 1y ago>Can you elaborate on the mechanical point you mentioned? Not really, because I don't really understand the specifics myself. I guess it's a situation where you either believe the conspiracy theories or you don't. I've still yet to have someone explain how a company like Oracle could jump 40% in a day and it not be either Dot Com Bust-level speculation, or else someone holding Oracle needing the company to be at a certain valuation. Things happened the day before the jump, and a week after it, Oracle was signing a deal to integrate with TikTok.
- tru3_power 1y agoI circled back to this, The only mechanics I can think of and I’m not sure if it’s really even really a thing (maybe someone can chime in) is that market makers buying shares to cover their calls or something along those lines? How does one even really trace this type of transaction?
- theoldgreybeard 1y agoI can’t wait for the apocalyptic razing that’s coming.
- refulgentis 1y agoVery unlikely (are you a greybeard? you should know this, unless we're at some sort of resentment > rational local minima)
- theoldgreybeard 1y agosam altman just needs another trillion dollars and then we'll finally have AGI and then the robots will do all the work and everyone will get a million dollars per year in UBI and everything will be perfect promise
- refulgentis 1y agoIf you're a greybeard, you would have lived this with many, many, companies, and I extremely doubt you'd be so fixated and angry as to mumble through a parody of what you perceive the counterargument as. Mine were Uber/Tesla, fwiw.
- theoldgreybeard 1y agoI'm not angry, I'm having a great time.
- zer0tonin 1y agoIf you were an actual "greybeard" your references would be Pets.com and Worldcom. Those didn't end the same way as Uber/Tesla.
- chasd00 1y agoto be fair, Worldcom ended in an accounting scandal. I had a friend who worked at UUNET and would sneak me into the megahub in Richardson TX at night to download movies and other large, for the time, files (first time i ever saw an OC148 in real life). UUNET was bought by Worldcom and then after the implosion my friend showed me these gigantic cube farms in the office that were completely empty of people. It was very weird.
- firstbabylonian 1y ago[flagged]
- cinntaile 1y agoDon't be dishonest... It's your app.
- akd 1y agoThe "Wall Street tech sell-off" is QQQM being down 1.7% over the last five days and up 17.4% over the last six months
- Elizer0x0309 1y agoI still believe in AI and I believe many of these companies are going to be staples of this new era. That said, I hope Oracle doesn't survive this transition. We need higher moral companies to usher in the AI era.
- kjreact 1y agoCompanies with high morality, do those even exist? Which one of the big tech companies do you expect to work towards benefiting humanity instead of focusing on turning a profit by any means?
- ojbyrne 1y agoDefinitely true, but Oracle is the worst, has been for decades.
- duxup 1y agoBig companies? I don't know. I know plenty of small tech companies that really do care about their customers top to bottom. There's no magic way for anyone to validate that claim because if I named them, nobody would know, there's no way to really know these things anyway. But they exist.
- brandensilva 1y agoThat's the point of having a government for the people by the people. But when you let billionaires take over that too then the people have zero protections from exploitation. If they cared they would invest in America paying more taxes, ensuring citizens are educated and capable of leading their companies versus offshoring and even competing with them. They don't want that and prefer their monopolies instead.
- fakedang 1y agoAnd as an aside, let's deep dive into the kind of person Larry Ellison is. Guy literally bought out an island where he rules as almost-a-king. You can't do shit in Lanai without Larry's say-so, and if you move out of Lanai or you quit/lose your job working for Larry, your only option is to sell your home back to him.
- zombiwoof 1y agoIf any government bails out AI data centers they should be drawn and quartered
- outside1234 1y agoIt just seems so obvious that all of these companies are going to unwind and yet I don't know how to avoid being damaged by this in my retirement funds in the S&P 500. Hopefully all of this happens before Open AI can be flogged to the public in an IPO large enough to get into the S&P 500 -- in which OpenAI then goes to zero
- eternal_braid 1y agoA company can't be included in S&P 500 if it doesn't make money, no matter what its market capitalization is. See Tesla for precedent.
- outside1234 1y agoWow, I never knew this. Well, that is good news, but I would also worry that Sam will do something shady to fake a profit too.
- chasd00 1y agoif it's a corporate 401k you can move it to something very conservative and probably protect yourself from the worst of it. I've built up a decent college fund for my boys in a standard issue vanguard brokerage account and one of their SP500 index fund. I'm going to go mostly to cash on Jan1 and wait a year and see what happens. I need that money in 2 years (my oldest will be starting college then) so I don't have a lot of time to recover from a full on crash.
- dangus 1y agoIf you aren’t close to retirement you don’t worry about damage, and if you are close to retirement your funds are hopefully already stuffed into munch more conservative funds. Long term investment strategy assumes and welcomes volatility to maximize returns. Continuous investment in a 401k means that every bubble burst lowers your cost basis (buying stocks at a “discount” post-burst, lowering your average price paid).
- yahoozoo 1y agoLarry will still be able to buy up social media and news companies with his son to steer them towards shilling for Israel.