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So 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 ra

by dmoy 11mo ago

So 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 11mo ago
Many 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 11mo ago
  [deleted]
tru3_power 11mo ago
When you say debt financing (Oracle) does that mean Oracle is actually financing the loans to these other companies? Sorry if I'm misunderstanding.
- financetechbro 11mo ago
  They’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 11mo ago
  [deleted]
re-thc 11mo 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 11mo ago
  Maybe they think that the AGI will buy stuff itself and they won’t need paying customers.
  - NoOn3 11mo ago
    If 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 11mo ago
  The 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 11mo 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 11mo 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.
      - 11mo ago

by dmoy 11mo ago

So 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 11mo ago

Many 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 11mo ago
[deleted]

tru3_power 11mo ago

When you say debt financing (Oracle) does that mean Oracle is actually financing the loans to these other companies? Sorry if I'm misunderstanding.

financetechbro 11mo ago
They’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 11mo ago
[deleted]

re-thc 11mo 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 11mo ago
Maybe they think that the AGI will buy stuff itself and they won’t need paying customers.
- NoOn3 11mo ago
  If 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 11mo ago
The 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 11mo 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 11mo 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.
    - 11mo ago