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Oracle's credit rating has been downgraded to a notch above "junk" status [1]. That means they can't borrow cheaply anymore. The only way to raise cash now is

by petilon 18d ago

Oracle's credit rating has been downgraded to a notch above "junk" status [1]. That means they can't borrow cheaply anymore. The only way to raise cash now is to cut payroll, and that's what they are doing. And what are they doing with the cash? Buying Nvidia hardware to rent out to OpenAI [2]. All Oracle is doing is unpacking Nvidia servers and plugging them in. This is a commodity business, Oracle has no IP in this. To fund it they are making deep cuts to their software development business which does have proprietary IP. That may have made sense when it was originally announced because AI hype was at its peak at the time. Indeed, Oracle's stock shot up when Stargate was announced, and Larry Ellison briefly became the world's richest person. However, since then the AI hype has evaporated, and hyperscalers are no longer being rewarded with a higher stock price. Oracle stock has dropped more than 50%, and companies NOT investing 100s of billions in AI hardware are now being rewarded, such as Apple. [1] https://www.nytimes.com/2026/07/31/magazine/takeaways-larry-ellison-oracle-ai.html https://www.nytimes.com/2026/07/31/magazine/takeaways-larry-... [2] https://en.wikipedia.org/wiki/Stargate_LLC https://en.wikipedia.org/wiki/Stargate_LLC

gruez 18d ago
>However, since then the AI hype has evaporated What? Nvidia stock, for instance has been moving largely sideways for the past 4 months. Maybe it's not as jubilant as before, but it hasn't exactly "evaporated".
- petilon 18d ago
  That's relative to the hype we had before. Previously any involvement in AI was rewarded heavily, but now it is being punished. Wallstreet previously punished Apple for not enough AI now they are being rewarded for not throwing 100s of billions into AI hardware.
  - LoganDark 18d ago
    Apple still did have to learn what it costs to invest in AI hype marketing, with all the lawsuits about the iPhone 16.
  - Danox 18d ago
    Apple is perpetually Doomed according to Wall Street.
- Analemma_ 18d ago
  I think the parent is overselling it when they say "AI hype has evaporated". Nvidia is still trading high because they're still selling shovels in the gold rush, and the frontier labs are still trading high as well. What is collapsing are the infra providers who are just selling commodities: even if the bubble doesn't crash they will get chewed up, because there is nothing preventing them from being forced to sell at COGS: they have no moat and eventually their margins will be driven to zero.
  - petilon 18d ago
    NVDA P/E is 26. That's hardly overhyped. For comparison AAPL P/E is 38.
    - drTobiasFunke 18d ago
      PE is forward looking. Apple has the business model where people will continue to buy their newer phones and devices and use their paid services at the same or higher prices for the foreseeable future. Do you think GPUs will continue to be bought at the same rate as during the ai data center buildout gold rush era, at the same ultra high up prices?
      - petilon 18d ago
        For CPUs, Moore's law lasted more than 50 years. We don't know how long it will last for GPUs. I think Nvidia will keep improving performance, lowering power consumption and reducing heat generation for many years to come.
- rsynnott 18d ago
  It hasn't entirely evaporated, but it has certainly calmed a bit, and Oracle was maybe the most incautious large company with this stuff.
coldpie 18d ago
Oracle going out of business would at least be one thing to celebrate in 2026.
- infamouscow 18d ago
  If Sam and Dario manage to kill Oracle, this whole era of software will have been worth it.
- cromka 18d ago
  I hope whoever buys their parents, they relicense ZFS
  - ghaff 18d ago
    I strongly suspect that broad enthusiasm for copy-on-write filesystems is largely past. Btrfs is out there and is the default for some Fedora editions. While I have no direct connections to that storage world any longer, I'm not convinced that relicensing ZFS would affect the landscape in a major way among the more significant distributions.
    - scheme271 18d ago
      It seems that btrfs is being phased out of fedora. It looks like Fedora will be moving to stratis storage over the next year or two. Btrfs is nice but it's raid5/6 support still seems shaky and there's odd corner cases that apply to all btrfs setups (getting stuck when free space is low is mostly resolved but can still occur).
      - ghaff 18d ago
        I'm not super-plugged into Fedora these days. Red Hat has long been pretty comfortable with a more conventional file system (think it's still XFS out of SGI by default) plus volume management for RHEL. ZFS was a non-starter for licensing reasons and Oracle; btrfs just wasn't there. I suspect things could have played out differently had Oracle relicensed ZFS once upon a time but that ship has likely sailed in a variety of ways.
jgalt212 18d ago
> All Oracle is doing is unpacking Nvidia servers and plugging them in. This is a commodity business But it's not if you can jump to the front of the GPU allocation line like Musk has done.
devttyeu 18d ago
What else does Oracle have? Mostly just a bunch of IP that a sufficiently strong AI will be able to recreate for a fraction of each customers bill. Oracle is very aware. Where is the value coming from when all knowledge work (and later manual work) is 10-100-10000x cheaper done by AIs? You probably don’t want to build models, too easy to move to another provider when one is better, open models eat your lunch etc. But there are still means of production to be owned but it’s just GPUs
rconti 18d ago
ORCL down more than 50% in the past 12mo.
Byvrsakjo10 18d ago
is it true that the companies investing 100s of billions into AI, have taken up a lot of debt in hope of AI making them trillions in revenue?
pharos92 18d ago
I'm very hopeful to see Larry loose everything, and Oracle stripped for parts. Karma that is well overdue.
keeda 18d ago
> All Oracle is doing is unpacking Nvidia servers and plugging them in. 1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom. 2. Nvidia servers are at the moment even less commodity than typical cloud servers and are currently THE hottest hardware resource in the world. Everyone is scrambling desperately to procure them, and the US and China are battling geopolitically over access to these things, and they are actively being smuggled to bypass these restrictions. > However, since then the AI hype has evaporated, and hyperscalers are no longer being rewarded with a higher stock price. This is a misreading of what has been happening with hyperscaler stock prices. They have consistently been punished despite record estimate-beating earnings pretty much every quarter for the past multiple quarters, precisely because they keep incinerating all that money and more on the same CapEx that Oracle is. At this point it is pretty clear that the biggest moat in the whole AI boom is access to compute, for which the demand has just kept exploding. (See: Anthropic paying its competitors through its nose to keep Claude up.) I've little love for Oracle, so I fear they will actually make out like bandits with these moves.
- syrrim 18d ago
  > 1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom. No, major cloud providers are mainly a software business. They provide unique manage cloud offerings, which provides value add over raw hardware as well as lock in. People on AWS cannot just move to GCP, let alone DO. Hence amazon can charge a substantial premium over the price of the hardware, which is why they make so much money. If all you are doing is plugging in GPUs, you don't provide that value add and are going to have very slim profits.
  - keeda 18d ago
    1. Cloud providers significantly markup bare metal and VMs even without managed services (lookup the numbers.) Managed services are the lock-in Trojan Horse clouds love to push but not everyone falls for them. Customers are OK paying for the fat margins not because of the managed services, but because of the elasticity, convenience and reduction in SRE headcount. 2. Why can’t cloud providers do the same thing with GPUs that they do with other servers? Are GPUs somehow not amenable to managed cloud offerings wrapping them? 3. Literally just having any access to GPUs (or heck, even memory) itself is the value add today. Maybe when we have supply to match the demand things will change, but that seems to be a ways away and points 1 and 2 above will still be in play anyways.
solidasparagus 18d ago
They can raise cash by selling off the stock they have spent a decade buying back.
- dam_jackalopes 18d ago
  Absolutely. They've just put themselves in a pretty poor situation to do even that. Whoops.
petre 18d ago
I'm going to get my popcorn and watch them fail, after Ellison went on raving about AI surveillance. https://fortune.com/2025/09/28/larry-ellison-ai-surveillance-oracle-tiktok-deal-social-media/ https://fortune.com/2025/09/28/larry-ellison-ai-surveillance...

by petilon 18d ago

gruez 18d ago

>However, since then the AI hype has evaporated What? Nvidia stock, for instance has been moving largely sideways for the past 4 months. Maybe it's not as jubilant as before, but it hasn't exactly "evaporated".

petilon 18d ago
That's relative to the hype we had before. Previously any involvement in AI was rewarded heavily, but now it is being punished. Wallstreet previously punished Apple for not enough AI now they are being rewarded for not throwing 100s of billions into AI hardware.
- LoganDark 18d ago
  Apple still did have to learn what it costs to invest in AI hype marketing, with all the lawsuits about the iPhone 16.
- Danox 18d ago
  Apple is perpetually Doomed according to Wall Street.
Analemma_ 18d ago
I think the parent is overselling it when they say "AI hype has evaporated". Nvidia is still trading high because they're still selling shovels in the gold rush, and the frontier labs are still trading high as well. What is collapsing are the infra providers who are just selling commodities: even if the bubble doesn't crash they will get chewed up, because there is nothing preventing them from being forced to sell at COGS: they have no moat and eventually their margins will be driven to zero.
- petilon 18d ago
  NVDA P/E is 26. That's hardly overhyped. For comparison AAPL P/E is 38.
  - drTobiasFunke 18d ago
    PE is forward looking. Apple has the business model where people will continue to buy their newer phones and devices and use their paid services at the same or higher prices for the foreseeable future. Do you think GPUs will continue to be bought at the same rate as during the ai data center buildout gold rush era, at the same ultra high up prices?
    - petilon 18d ago
      For CPUs, Moore's law lasted more than 50 years. We don't know how long it will last for GPUs. I think Nvidia will keep improving performance, lowering power consumption and reducing heat generation for many years to come.
rsynnott 18d ago
It hasn't entirely evaporated, but it has certainly calmed a bit, and Oracle was maybe the most incautious large company with this stuff.

coldpie 18d ago

Oracle going out of business would at least be one thing to celebrate in 2026.

infamouscow 18d ago
If Sam and Dario manage to kill Oracle, this whole era of software will have been worth it.
cromka 18d ago
I hope whoever buys their parents, they relicense ZFS
- ghaff 18d ago
  I strongly suspect that broad enthusiasm for copy-on-write filesystems is largely past. Btrfs is out there and is the default for some Fedora editions. While I have no direct connections to that storage world any longer, I'm not convinced that relicensing ZFS would affect the landscape in a major way among the more significant distributions.
  - scheme271 18d ago
    It seems that btrfs is being phased out of fedora. It looks like Fedora will be moving to stratis storage over the next year or two. Btrfs is nice but it's raid5/6 support still seems shaky and there's odd corner cases that apply to all btrfs setups (getting stuck when free space is low is mostly resolved but can still occur).
    - ghaff 18d ago
      I'm not super-plugged into Fedora these days. Red Hat has long been pretty comfortable with a more conventional file system (think it's still XFS out of SGI by default) plus volume management for RHEL. ZFS was a non-starter for licensing reasons and Oracle; btrfs just wasn't there. I suspect things could have played out differently had Oracle relicensed ZFS once upon a time but that ship has likely sailed in a variety of ways.

jgalt212 18d ago

> All Oracle is doing is unpacking Nvidia servers and plugging them in. This is a commodity business But it's not if you can jump to the front of the GPU allocation line like Musk has done.

devttyeu 18d ago

What else does Oracle have? Mostly just a bunch of IP that a sufficiently strong AI will be able to recreate for a fraction of each customers bill. Oracle is very aware. Where is the value coming from when all knowledge work (and later manual work) is 10-100-10000x cheaper done by AIs? You probably don’t want to build models, too easy to move to another provider when one is better, open models eat your lunch etc. But there are still means of production to be owned but it’s just GPUs

rconti 18d ago

ORCL down more than 50% in the past 12mo.

Byvrsakjo10 18d ago

is it true that the companies investing 100s of billions into AI, have taken up a lot of debt in hope of AI making them trillions in revenue?

pharos92 18d ago

I'm very hopeful to see Larry loose everything, and Oracle stripped for parts. Karma that is well overdue.

keeda 18d ago

> All Oracle is doing is unpacking Nvidia servers and plugging them in. 1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom. 2. Nvidia servers are at the moment even less commodity than typical cloud servers and are currently THE hottest hardware resource in the world. Everyone is scrambling desperately to procure them, and the US and China are battling geopolitically over access to these things, and they are actively being smuggled to bypass these restrictions. > However, since then the AI hype has evaporated, and hyperscalers are no longer being rewarded with a higher stock price. This is a misreading of what has been happening with hyperscaler stock prices. They have consistently been punished despite record estimate-beating earnings pretty much every quarter for the past multiple quarters, precisely because they keep incinerating all that money and more on the same CapEx that Oracle is. At this point it is pretty clear that the biggest moat in the whole AI boom is access to compute, for which the demand has just kept exploding. (See: Anthropic paying its competitors through its nose to keep Claude up.) I've little love for Oracle, so I fear they will actually make out like bandits with these moves.

syrrim 18d ago
> 1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom. No, major cloud providers are mainly a software business. They provide unique manage cloud offerings, which provides value add over raw hardware as well as lock in. People on AWS cannot just move to GCP, let alone DO. Hence amazon can charge a substantial premium over the price of the hardware, which is why they make so much money. If all you are doing is plugging in GPUs, you don't provide that value add and are going to have very slim profits.
- keeda 18d ago
  1. Cloud providers significantly markup bare metal and VMs even without managed services (lookup the numbers.) Managed services are the lock-in Trojan Horse clouds love to push but not everyone falls for them. Customers are OK paying for the fat margins not because of the managed services, but because of the elasticity, convenience and reduction in SRE headcount. 2. Why can’t cloud providers do the same thing with GPUs that they do with other servers? Are GPUs somehow not amenable to managed cloud offerings wrapping them? 3. Literally just having any access to GPUs (or heck, even memory) itself is the value add today. Maybe when we have supply to match the demand things will change, but that seems to be a ways away and points 1 and 2 above will still be in play anyways.

solidasparagus 18d ago

They can raise cash by selling off the stock they have spent a decade buying back.

dam_jackalopes 18d ago
Absolutely. They've just put themselves in a pretty poor situation to do even that. Whoops.

petre 18d ago

I'm going to get my popcorn and watch them fail, after Ellison went on raving about AI surveillance. https://fortune.com/2025/09/28/larry-ellison-ai-surveillance-oracle-tiktok-deal-social-media/ https://fortune.com/2025/09/28/larry-ellison-ai-surveillance...