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cmiles8 18 hours ago [-]
Market signals on an impending AI bust are broader than just Oracle’s woes.
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.
lelanthran 17 hours ago [-]
> Market signals on an impending AI bust are broader than just Oracle’s woes.
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.
someuser54541 17 hours ago [-]
What's the best way to hedge against this, considering many of us have significant savings in the market?
A few puts on SPY dated a year or two out?
cmiles8 17 hours ago [-]
Stay well diversified, keep investing each month, and take a nap.
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.
someuser54541 17 hours ago [-]
I suppose I'm just a little worried about a 10 year sideways market. The run-up has been absolutely insane the past year...some graphs are just a literal straight line up. I didn't get to participate in much of that and concerned the prevailing wisdom on these larger timescales may no longer hold true.
jryan49 16 hours ago [-]
Stocks are long term investments, 10yr+
So you should expect the possibility of a sideways market.
fny 17 hours ago [-]
If you didn't participate in it, what are you hedging?
kazinator 16 hours ago [-]
I would guess, longer positions held from before the past year to date period.
(As for me, I'm just hedging my rhetorical front lawn.)
magicalist 16 hours ago [-]
> If you didn't participate in it
But that's not what they said?
>> I didn't get to participate in much of that
mancerayder 10 hours ago [-]
The S&P is through the roof because of the AI boom - it's bound to crash if the big players do. What's a better index?
It's hard to imagine a world in which these broad indexes don't crash too. It's the sector indexes I'd love to understand better from a cyclical point of view, so I can buy something that won't also crash.
pid-1 16 hours ago [-]
Hold short term debt (e.g money market funds or SOFR ETFs). Then you will have cash in hand if either stocks fall or yelds raise.
Never buy derivatives as a non institutional investor.
rich_sasha 16 hours ago [-]
It's worth adding that conventional wisdom says, you can't time the market. On average, people shifting between cash and stocks to time shocks lose out over just holding a fixed portfolio.
pid-1 16 hours ago [-]
Absolutely 100% agree.
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.
dboreham 16 hours ago [-]
Sometimes conventional wisdom stops being wise. Also 90% of the people in charge of conventional wisdom have their personal wealth depend on retail investors not selling.
fhdkweig 16 hours ago [-]
I moved 80% of my money out of Vanguard's Target Date Retirement funds and into a money market on June 1st. In the 1.5 months since, the remaining Target Date Retirement fund has fluctuated up and down by about 0.1%. It has basically plateaued. I don't think I am losing out on potential short term gains. I like the idea that I have cash available to buy in on the day of the crash.
le-mark 16 hours ago [-]
Good luck dude! This kind of move can pay off big or not, clearly. I’ve personally talked to fable about this a lot, suggest everyone does.
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.
matwood 4 hours ago [-]
What percentage drop do you need to consider it a 'crash' and to buy back in? Is it a drop from when you sold or the peak? What if the peak is another 20% higher and the crash is 10%? While you're sitting in cash, you're also losing to inflation each day.
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.
wil421 16 hours ago [-]
My boss has already done this several times over the past couple years because of some impeding market crash. Then he goes back and buys a week or so later.
chasd00 15 hours ago [-]
> I moved 80% of my money out of Vanguard's Target Date Retirement funds
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.
fhdkweig 15 hours ago [-]
2045. When they hit their target date, they are still exposed about 50% to stocks, which is more than I want right now.
You want to search for the chart at "Allocation to underlying funds (actual)"
BeetleB 15 hours ago [-]
Honest question: Do you expect the AI crash to have a bigger impact on the economy than a global pandemic that shut everything down did?
fhdkweig 14 hours ago [-]
I don't know, but they aren't really in the same category either. The pandemic didn't shut down everything. It didn't really shut down much, people worked from home and got deliveries instead of doing things in person. There were sectors that were hit bad, but certainly not everything.
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.
BeetleB 14 hours ago [-]
My point is that whether there will be a crash or not is incredibly hard to predict. COVID did not come with a stock market crash, but it affected employment much more than a possible AI crash will.
> 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.
overfeed 13 hours ago [-]
> My point is that whether there will be a crash or not is incredibly hard to predict. COVID did not come with a stock market crash
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.
BeetleB 13 hours ago [-]
> 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?
jghn 15 hours ago [-]
what if you buy on the day of the crash only to discover that was day one of a year long crash?
mancerayder 10 hours ago [-]
Then he's beating those who held right before crash number 1, right?
jghn 10 hours ago [-]
Depends on what he left on the table sitting on cash in the run up first
fhdkweig 15 hours ago [-]
I feel that even if that happens, at least I wasn't fully exposed to the first drop.
sitzkrieg 11 hours ago [-]
i mostly agree with this (look at the survivor rate of retail traders of any instrument lol)
but it is possible to do safely. i’m a few decades in now
marojejian 16 hours ago [-]
Why should a retail investor never buy derivatives? spreads?
pid-1 16 hours ago [-]
Retail investors do not have access to systems that calculate risk, margins, pnl, etc... and generally also don't have the necessary knowledge and market data to price such instruments correctly.
Most ppl are better off KISSing and lowering risk by selling equity for fixed income.
jurgenburgen 14 hours ago [-]
Ironically you can use AI tools to get some idea of how to trade puts.
sitzkrieg 11 hours ago [-]
this hasn’t been true for years. retail investors can’t get advanced risk suites from any normie broker these days
inigyou 15 hours ago [-]
You almost always lose a lot of money if you're seeking safety. Protection from downside risk on your S&P500 investments may cost 20-30% of your investment at which point you're better off just selling the investment and hoping it doesn't go up by that much.
solumunus 14 hours ago [-]
> Protection from downside risk on your S&P500 investments may cost 20-30% of your investment
What? Absolutely not.
inigyou 13 hours ago [-]
What did you buy and for how much?
solumunus 5 hours ago [-]
You would buy puts. How much to spend is really up to you, but you can definitely get meaningful downside protection for much much less than that.
dboreham 16 hours ago [-]
Not the parent but I'm guessing: a) it's expensive and b) you can shoot your feet off.
baq 15 hours ago [-]
It’s scaremongering, you can learn all this stuff.
However! If you don’t want to learn and want to get rich quick instead, stay away.
baal80spam 16 hours ago [-]
It's all about getting a call from the dreaded Margin.
georgeecollins 16 hours ago [-]
100% this is great advice!
14 hours ago [-]
moduspol 17 hours ago [-]
I thought that a year or two ago. Thankfully I did not. I have no idea how long the music will keep playing.
ashtonshears 14 hours ago [-]
I am not a financial advisor.
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.
chasd00 15 hours ago [-]
> What's the best way to hedge against this, considering many of us have significant savings in the market?
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.
icedchai 12 hours ago [-]
I knew guys who panicked in Feb 2020, at the start of covid. They moved everything to cash, never got back into the market. Things recovered faster than they thought. The unfortunate truth is they would've more than doubled their money if they stayed invested.
the__alchemist 17 hours ago [-]
#1: Great question, and I would love to hear the answers (And am learning from the ones posted)
#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.
arielcostas 17 hours ago [-]
Wouldn't it be wiser to get out of the market into fixed rate assets like government bonds? Maybe have some into puts on SPY (or QQQ since tech would probably have bigger losses) too, but mainly getting out of long positions on what seems a really overvalued stock market
nsagent 16 hours ago [-]
Wouldn't it be wiser to get out of the market into fixed rate assets like government bonds?
I did that earlier this year ahead of the April earnings reports. I was a bit too early to the punch, but I prefer that versus being too late.
I just hope the companies aren't considered too big to fail. Bailing them out would be a bad idea.
I just hope the companies aren't considered too big to fail. Bailing them out would be a bad idea.
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.
nunez 6 hours ago [-]
Bogleheads would say to stick to a three headed portfolio, maybe a bit more biased towards bonds. So that's what I'm doing.
glaslong 17 hours ago [-]
Bet on Chinese tech sector to eat everyone's lunch with cheaper, faster, smaller, open-weight models?
inigyou 15 hours ago [-]
Just sell all your ETFs and buy them again when the market goes up or down. You're very likely to lose money with options and you will definitely lose a lot of money if you buy enough options to hedge your full exposure.
jr3592 15 hours ago [-]
And risk missing out on the gains in the market that can and likely will happen between then and now.
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.
inigyou 15 hours ago [-]
You will definitely lose less in opportunity cost than the actual cost of hedging your position, because hedging is extremely expensive and cancels out almost all gains. If it was cheap, everyone would do it.
chasd00 15 hours ago [-]
unless you're doing this in an IRA or your 401k remember the IRS wants its cut of any gains you may lock in. That's a painful check to write let me tell you.
15 hours ago [-]
lelanthran 17 hours ago [-]
What's the best way to hedge against this, considering many of us have significant savings in the market?
I dunno.
"The market can remain irrational longer than you can remain solvent"
duxup 14 hours ago [-]
Is there really any answer to this kinda thing other than having a diversified portfolio and just riding it out?
brianwawok 14 hours ago [-]
So you want to pay back the gains you make for the next year or two? Sounds like a good strategy
linsomniac 15 hours ago [-]
Reminder: Serious people have been predicting a market crash "within the next 3 months" for 3 years now. In that time, the "market" has gone up around 70% (66%-86% depending on the what part you are looking at).
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.
hnisnotbenign 10 hours ago [-]
[flagged]
steve1977 17 hours ago [-]
Gold maybe? (no investment advice)
bsimpson 17 hours ago [-]
It's tempting to sell a bunch, but then you've got cash. What do you do with cash when the government keeps printing money and assets are all overpriced?
DANmode 10 hours ago [-]
> savings
> 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.
fakedang 11 hours ago [-]
Dogs of the Dow
gruez 17 hours ago [-]
>A few puts on SPY dated a year or two out?
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.
turbonaut 17 hours ago [-]
The ask was not how to make money, it was how to hedge.
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.
someuser54541 17 hours ago [-]
> but unless you think have some special insight that hedge/quant funds don't have
Of course not, but it is a hedge, is it not? What would be your preferred hedge in this scenario?
sitzkrieg 17 hours ago [-]
agree, mostly true. always better to find a credit spread for your desired exposure
quickthrowman 13 hours ago [-]
Options market makers have no idea where the S&P will be in one year, options are priced on the current implied volatility. The bid and ask will be slightly lower and higher than the true current option price so the MM can make their nut on the spread and then hedge so they’re delta neutral.
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.
notatoad 16 hours ago [-]
My understanding of the ai circular financing racket is that not everyone will be running for a chair.
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.
ndsipa_pomu 15 hours ago [-]
Doesn't Nvidia's success depend hugely on AI money pumping up demand for their products? If/when AI companies run out of money to keep investing in data centres, the bottom will fall out of the market and hopefully we can go back to buying reasonably priced graphics cards.
14 hours ago [-]
dibbsonline 15 hours ago [-]
Takes a lot of IaaS to support the GPUs and workflows, all of that kit is immediately re-useable as general purpose compute to exit the commercial DCs they operate out of today.
Much of their current debt fuelled expansion isn't singular to AI. The circular narrative ignores this.
surgical_fire 14 hours ago [-]
Without the massive investiment in GPUs, what is the excessive IaaS going to support?
r_lee 14 hours ago [-]
not to mention how little it costs compared to the actual GPU silicon
seanmcdirmid 14 hours ago [-]
Oracle has been a toxic tech for a long time (along with IBM). I don't think anyone is putting it in the same bucket of modern tech companies, let alone AI companies.
Frankly, their forays into dubious financial engineering and investments are expected at this point.
kazinator 16 hours ago [-]
It would be great if they open sourced the proprietary bits in the VirtualBox suite before that.
simoncion 16 hours ago [-]
Other than having a nice management UI, what does Virtualbox do that qemu doesn't these days?
kazinator 15 hours ago [-]
Run your years-old VirtualBox images? If I were to guess; maybe QEMU does that too.
simoncion 14 hours ago [-]
The qemu-img(1) installed on my system claims that it supports every disk format supported by Virtualbox [0], so I guess the only thing left would be to be able to handle the "machine definition" file.
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.
Regardless of how suitable qemu is for Vbox users, it's unmatched for batch uses, like as something part of a distro build chain to allow non-cross-compilable packages to be built for ARM on x86-64 and such. And ... to interactively step into cross-compiled sysroots.
Vbox has the desktop experience. The "guest integration" stuff and whatnot. If you've used it for years, familiarity.
solumunus 14 hours ago [-]
And let’s be honest there’s absolutely no chance Oracle will be successful here right?
echelon 17 hours ago [-]
Everyone in the tech and media world is dead set on this being a bubble.
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.
xboxnolifes 17 hours ago [-]
A financial bubble has almost nothing to do with how good the product is. It's about how much of the value the company can capture, and what the ratio of that capture is compared to the investment.
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.
lelanthran 16 hours ago [-]
This:
> 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.
chasd00 16 hours ago [-]
I think the "bubble" is more about return on investment and not usefulness of the technology. So much money has been invested on the assumption that so much return is going to materialize. The more money going in the bigger the expectation of return, that's the bubble.
sofixa 16 hours ago [-]
> 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.
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.
dboreham 16 hours ago [-]
Yes, but all bubbles (except the tulips...) have a real, valuable, new technology at their core. That it's amazing technology doesn't stop the financial side of it being a bubble. In fact it all but ensures it is.
tptacek 17 hours ago [-]
This is a pretty Oracle-specific situation, isn't it? They bet the company on an AI infrastructure buildout and levered hard to do it. Google, Amazon, and Microsoft aren't in comparable situations. Oracle is transforming itself into a value-added CoreWeave (not just in terms of product packaging but also the financial structure of the company), in a way the other hyperscalers aren't.
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.
echelon 17 hours ago [-]
Fable and Seedance are wildly good products, and they're creating lots of opportunity for disruption.
Oracle is in a weird shape.
Ancalagon 17 hours ago [-]
And none of the major model makers (not counting SpaceX) have IPO'd yet
dragonwriter 17 hours ago [-]
Pretty sure Google fits any definition of major model maker that SpaceX does, and had their IPO long before SpaceX.
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.
KerrAvon 15 hours ago [-]
Meta had Llama, which set a lot of things on fire in a good way, and then disappeared from the scene as tech advanced.
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.
xnx 17 hours ago [-]
Google (and to a much lesser degree, Facebook)
Ancalagon 17 hours ago [-]
Google's "IPO" is an extra raising round
Is Meta even in this race anymore?
Maxatar 17 hours ago [-]
Is Gemini really that unpopular?
Avicebron 16 hours ago [-]
If you don't count the autosummary/gen answer at the top of googling an answer I would say so. Outside of the more technically inclined crowd I think the sentiment is if you aren't at the forefront (opus/fable/chatgpt) then your last or at least indistinguishable from all the rest of the lesser models.
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.
axus 14 hours ago [-]
They get all of the ad revenue, but really don't sell as many money-losing monthly subscriptions as the other guys.
cozzyd 12 hours ago [-]
But Gemini is bundled with various plans, like the ones that give you more storage for photos.
16 hours ago [-]
Aurornis 16 hours ago [-]
> And when the cash dries up this whole thing comes crashing down like a house of cards.
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.
jagged-chisel 17 hours ago [-]
I was at the ophthalmologist for the second time in two weeks - my new prescription wasn't quite right, new lenses should be here this week.
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
duxup 14 hours ago [-]
Can the existing AI leaders sort of turtle up / cut research and … be profitable with what they have?
richwater 17 hours ago [-]
Hi there, how do you know Amazon's bond offering was "challenging"? Curious to learn more. Thank you.
cmiles8 17 hours ago [-]
A bunch of press on this today you can look up. Demand on the offering was much lower than expected and what materialized in prior rounds. Amazon had to sweeten the deal to get the money loaned.
ifwinterco 17 hours ago [-]
Low bid to cover ratio - it's rare for bond auctions to out and out fail (that would be fairly disastrous), but you can have an auction where they successfully sell all the bonds they were trying to sell but with much less demand than they were hoping for.
That's not a good sign and it's a blatant red flag for the market
semiquaver 17 hours ago [-]
Nothing says “full of shit” like someone saying “market is signaling an impending X”. Why not make a huge levered bet and get wildly rich if you think so?
xienze 17 hours ago [-]
Knowing "what" will happen is different from knowing "when" it will happen.
dragonwriter 17 hours ago [-]
Also, even knowing both what will happen and when is a separate thing from having access to capital. You can't really tell that someone posting that hasn't already also taken the biggest leveraged position they can (unless that person is so rich that doing so would itself visibly move the market, which most people who might post comments are not.)
s1artibartfast 16 hours ago [-]
Then you don't know it's impending
cmiles8 17 hours ago [-]
Bingo
pocksuppet 18 hours ago [-]
IMHO these signals have more to do with the market than AI. They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining to be invested.
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.
lelanthran 17 hours ago [-]
> They aren't finding AI to be have less ROI than before - they are requiring higher ROI than before, because there is less money remaining.
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.
s1artibartfast 17 hours ago [-]
ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns.
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
quickthrowman 16 hours ago [-]
> ROI on bank loans to Oracle and corporate bonds. Those will have interest rates and returns.
Those are intrinsically linked to ORCL equity. ORCL needs an ROI to service their debt.
s1artibartfast 16 hours ago [-]
what point are you making?
I was clairifying what ROI the parent was discussing.
There are different ROIs which are not the same, even if related.
ericmay 17 hours ago [-]
> 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.
ceejayoz 17 hours ago [-]
> If the shares tank, the valuation of the company goes down and locked up shares lose value.
"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.
ericmay 17 hours ago [-]
The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them. The entire proposition that you are putting forth has no real basis in reality, and doesn’t even match the expected behaviors of your trope of strawman investors.
> 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.
ceejayoz 16 hours ago [-]
> The flaw in your thinking here is that you’re assuming these greedy people that you are creating in your head would prefer to lose half the value of the shares instead of doubling them.
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.
ericmay 16 hours ago [-]
> The flaw in your thinking is assuming it's actually worth the IPO price.
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.
ceejayoz 16 hours ago [-]
> Then don't buy it at the IPO price?
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.
ericmay 14 hours ago [-]
I wrote in another post which I think fits nicely here: 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.
> 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.
ceejayoz 13 hours ago [-]
> 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.
No, I am not. That’s the “it plunges to $50/share before I can offload” period.
ericmay 11 hours ago [-]
You're just making stuff up.
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.
lelanthran 17 hours ago [-]
My point was that there is no ROI until the investors exit!
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!
ericmay 17 hours ago [-]
And when do those investors exit?
Nobody forces you or any other individual investor to buy shares in their “pump-and-dump company” when it lists.
lelanthran 16 hours ago [-]
> And when do those investors exit?
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.
ericmay 16 hours ago [-]
> My point is that until those investors exit, there is no ROI.
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.
s1artibartfast 16 hours ago [-]
In terms of Oracle, the topic of this thread, lenders are already getting paid out. Oracle borrows money and issues corporate bonds at fixed percentage rates.
Oracle paid out 5 billion in interest last fiscal year.
CamperBob2 15 hours ago [-]
Nobody forces you or any other individual investor to buy shares in their “pump-and-dump company” when it lists.
Well, they certainly tried to, with SpaceX.
csoups14 17 hours ago [-]
> If individual investors are buying shares and getting blown up, that’s their problem. Invest and due your own research.
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?
ericmay 16 hours ago [-]
> It's the 1920s all over again; publicly pump and privately sell into the demand you're creating.
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.
csoups14 16 hours ago [-]
Every day investors absolutely buy these shares; these price targets are publicly available and SpaceX shares are equally publicly available. You've claimed everyone who is disagreeing with you in this thread is not providing a coherent argument. Have a great day mate.
ericmay 16 hours ago [-]
> Every day investors absolutely buy these shares; these price targets are publicly available and SpaceX shares are equally publicly available.
And you can just not buy the shares. It's very straightforward.
ceejayoz 16 hours ago [-]
> 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".
ericmay 14 hours ago [-]
You can't make an informed decision on it unless you do your own research and analyze an individual stock. Then it's up to you to decide if it's worth investing in. This is true for any investment. Just because you think something is bullshit doesn't mean it is. Maybe you're just wrong. Buy the security or don't.
ceejayoz 13 hours ago [-]
> You can't make an informed decision on it unless you do your own research…
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.
ericmay 11 hours ago [-]
> Most retail investors suffer from significant information asymmetry. We have regulations, in part, to mitigate this fact.
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.
ceejayoz 10 hours ago [-]
A pump and dump is information asymmetry writ large. It’s how it works!
A pump and dump scam doesn’t care if valuation goes down as long as they can exit profitably.
nradov 11 hours ago [-]
You appear to have misunderstood the role of the SEC. They will investigate civil violations of securities laws but there has been no credible allegation of such here. They don't take responsibility for stock valuation.
ceejayoz 10 hours ago [-]
> They don't take responsibility for stock valuation.
Nice strawman, but that's not what I said.
They can, and do, intervene in things like lying to investors to inflate valuations.
3848484894 17 hours ago [-]
With a couple million dollars, you can buy many many articles on the financial times and barron's. With a couple friends, you can get other friends in pension funds to allocate into you. With other friends, you can get beneficial messaging from all sorts of public and private channels. Banks and funds can pump your offerings for something in return if you went to the right bar mitvah. Of course this only lasts for some time, but if Billy the boomer and the Korean teachers pension fund bought in, you are already half way there.
Information is only relevant in the long term, in the short term the stock market is about FRIENDSHIP.
ericmay 16 hours ago [-]
Sure, but this applies to any sufficiently advanced conspiracy theory and wouldn't be limited to markets. Secondly you the individual can just not buy the shares if you think they are overvalued. You're confusing your own interpretation of the valuation of some company with "the right valuation". Maybe you're just wrong and they're not over valued? Maybe you're right? It doesn't matter much, except you can buy shares in companies that your investment thesis and modeling suggests you might buy.
3848484894 16 hours ago [-]
What I'm saying is that it's a very small world. There's no conspiracy here just friendship and love.
The bond market is measuring the risk of repayment though not the success ROI of the dollars invested by the company (that impacts the stock price but not so much the bond price). The bond markets are hiccuping on AI because there’s growing concern that these loans simply won’t get repaid.
jstanley 17 hours ago [-]
> there is less money remaining.
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.
qeternity 17 hours ago [-]
> is supposed to be the central bank's job.
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.
s1artibartfast 17 hours ago [-]
Challening bond offerings and higher yields can be a funtion of supply.
Downgrade of credit worthiness is different. That depends on how leveraged the company is
toomuchtodo 17 hours ago [-]
Kinda cool to be at a point in the hype cycle where the capital markets are almost exhausted due a to a speculative bubble, pushing up yield demand. Move over 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)
chasil 18 hours ago [-]
And they terminated 30k employees to achieve this?
When we tried to do a pilot with their cloud we couldn't even sign-up. None of the corporate credit cards were accepted.
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.
Aurornis 16 hours ago [-]
I signed up for Oracle Cloud. I couldn’t get any of the free trial options to work due to capacity limits. I couldn’t get my payment method added so I could pay for real servers.
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.
url00 15 hours ago [-]
Similar experience. It was surreal coming from the (relatively) simple waters of Azure and Digital Ocean.
jorl17 15 hours ago [-]
Every couple of years I try Oracle Cloud and nothing ever really works. It feels like it was built by people who literally cannot see the final result of what they work on. Signing up, adding cards, clicking links in e-mails -- nothing worked! Nothing has ever reliably worked!
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.
Analemma_ 17 hours ago [-]
Oracle Cloud sometimes feels like an elaborate prank that I'm not in on. I know people and companies on AWS (obviously), Azure, Google Cloud, Hetzner, CloudFlare's various PaaS offerings, etc., but I can't name a single thing running on Oracle Cloud. Somebody out there is clearly using but I'll be damned if I know who it is.
neo_doom 16 hours ago [-]
We host more than 200 customers in OCI (because we have to). Its terrible. The service is terrible and they are breaking stuff all the time. Amsterdam down for a few hours today alone. We spend millions with them and can’t even get someone to join a bridge. It’s baaad
nunez 5 hours ago [-]
Zoom ran on OCI some time ago; not sure if they still do. (They got a shitload of free credits iirc)
Many companies use OCI for their Oracle DBs, as I believe they get some sort of discount when run this way.
tmp10423288442 17 hours ago [-]
TikTok for US users
bhouston 17 hours ago [-]
When your customers are government mandated, are they really customers or hostages?
dragonwriter 16 hours ago [-]
Uh, while the sale to the Oracle-led group was government mandated, the use of Oracle Cloud for hosting by the new US TikTok is just self-dealing by the new ownership.
Of course, when your “customers” are just self-dealing, that’s also not a great sign.
xorcist 16 hours ago [-]
Keep in mind that Oracle can be deliberately nebulous about what their cloud offering is (pun intended).
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.
alephnerd 17 hours ago [-]
> I can't name a single thing running on Oracle Cloud
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.
ethbr1 17 hours ago [-]
I think the market for Oracle Cloud is the same for early GCP: companies with large enough needs and strong enough engineering teams that they can leverage "X runs on Oracle Cloud" into deep discounts. And then cover the gaps with engineering.
wil421 16 hours ago [-]
A company I worked at knowingly bought very sub-par oracle products just to get discounts on the Oracle ERP and DB stuff.
alephnerd 17 hours ago [-]
Partially. It's basically only enterprise and upper market organizations that were hit by billing re-negotiations by AWS, GCP, or Azure and want a high touch experience.
cyberpunk 17 hours ago [-]
zoom. uber. airbnb. openai. bunch of banks. samsung, apparently..
seattle_spring 17 hours ago [-]
I know at least one of those only uses Oracle for internal/HR "cloud" purposes, while their main customer-facing business is on AWS. Not sure about the others, but when I think of a business using "Oracle cloud" I don't interpret it as just their marketing/HR.
soared 17 hours ago [-]
A lot of internal stuff ends up on Oracle cloud since it’s easier, jira, confluence, etc
csomar 17 hours ago [-]
Good to know it's not only problematic on the free tier. I wanted to sign up to get the free credits but couldn't finish the setup. I tried again now and it accepted/charged my card ($1 verification test) but then after the account was created it said I need a credit card?
BoorishBears 17 hours ago [-]
For the longest time they were a piñata for free compute with people making multiple accounts for their free ARM instance, but with the AI crunch they're clamping down.
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
UltraSane 17 hours ago [-]
That is crazy. One of the main rules of business is to always make it as easy as possible for customers to give you money.
dmix 16 hours ago [-]
Enterprise companies typically don’t just add credit card forms, they push you through a sales process and don’t care much for small accounts.
UltraSane 12 hours ago [-]
For automated cloud computing services they do.
dmix 7 hours ago [-]
Microsoft pretends they do this with Azure where they'll let you signup with a credit card but anyone who has used Azure knows that the web admin is absolutely terrible and almost always requires speaking to a disinterested human to set it up properly.
I'm skeptical Oracle fits into the wider SaaS business category vs enterprise sales.
nunez 5 hours ago [-]
I've spun up Azure accounts with a cc several times fwiw
quickthrowman 13 hours ago [-]
Not if the goal is to get you into a sales funnel with a sales exec to juice the contract value. Oracle doesn’t give a single shit about someone spending $500/month
UltraSane 12 hours ago [-]
Oracle cares if 10 million people are spending $500 a month
Ancalagon 17 hours ago [-]
They couldn't integrate a payment provider and expect to build out the data centers for AGI?
Uh, good luck guys.
pgn674 18 hours ago [-]
Title is inaccurate. They're BBB- now, not BBB.
wyrdcurt 17 hours ago [-]
True. The linked article's title says that. I wonder if that was a typo by the OP or one of those HN quirks where the title was automatically changed when it shouldn't have been.
abirch 17 hours ago [-]
I think there's an errant space in between the BBB and the - but yes, the title is wrong with that space
dmurvihill 16 hours ago [-]
I bet the author submitted "to BBB-, one above junk" and an ignorant editor turned the minus into an em dash
fuzzfactor 17 hours ago [-]
I would say that the more a company still has plenty of old-fashioned intangible positive corporate goodwill, the bigger the notch.
Wouldn't want to be negative at a time like this.
dralley 18 hours ago [-]
Here's hoping this screws up the collateralization of the Paramount takeover deal, and the whole thing unravels.
harmmonica 16 hours ago [-]
I looked this up yesterday triggered by their threat to move the combined company out of CA. Oracle’s stock price, at least, which is way off its 52-week high, is about the same as it was at the time the WBD deal was announced.
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.
segmondy 17 hours ago [-]
I hope not, that would further weigh them down.
Reptur 17 hours ago [-]
This site is shady as hell. You try to decline marketing in their pop-up and it hides maybe a 100 providers and expects you to click each one individually.
rf15 17 hours ago [-]
This shady site is an established business created in 1949.[1]
All "shady sites" happen to belong to business created in 1949?
That's quite the coincidence.
lelanthran 17 hours ago [-]
Ed Zitron must be feeling quite validated :-)
bpavuk 17 hours ago [-]
he is correct on most counts and for the rest I lack the competence to vouch for or denounce his research. a rare sight!
surgical_fire 14 hours ago [-]
I like his work.
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.
nunez 5 hours ago [-]
I don't think Zitron's argument is that AI is useless so much as that AI in it's current form is unsustainable and maligned with what's good for society long-term (which I agree with).
bpavuk 13 hours ago [-]
well, I've been working on the Zig compiler lately, there you have to swear off using AI in any capacity. even your tab-complete, yes. I find that yes, I'm a little slower with regexes instead of GPT mini/Luna models as a find/replace engine, but I am quickly getting grasp of it, and I see the future where I'm faster with Neovim and ripgrep than Codex. the structure of the standard library is super-logical and the code is eye-wateringly readable. I don't even feel the need in, or will to, use Codex in any capacity when working on such a great project. DVUI is also great to work with.
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
hobonation 18 hours ago [-]
Is it me or do none of the AI companies have a "moat" in the Ben Grahmm sense.
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.
RansomStark 18 hours ago [-]
I've been thinking for a while, there's not real winners here except the incumbent technology providers. Hear me out: all models are converging towards the same level, gains are getting smaller and harder to come by. The models are commodities nothing more.
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
rsoto2 16 hours ago [-]
Step 2. Rising competition causes returns to fall below cost of capital.
Google has a bit of a Network Effect going... my vehicle got an OTA update to use Gemini. Between that, search, storage, and the YT Premium bundle it was enough to convince me to float a subscription.
ceejayoz 18 hours ago [-]
> my vehicle got an OTA update to use Gemini
G. A. H.
edit: Y'all downvoters want genAI in your cars?!
californical 14 hours ago [-]
It’s not interesting to talk about per HN rules, but I expect your downvotes are because your comment doesn’t add any substance or interesting new details, not because people disagree with you. Votes here are different than Reddit (oh you have 94k HN karma! You probably know that then)
17 hours ago [-]
boron1006 18 hours ago [-]
I think anthropic with its enterprise strategy and google
with its integration in everything have a bit of a moat.
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.
lelanthran 17 hours ago [-]
> I think anthropic with its enterprise strategy and google with its integration in everything have a bit of a moat.
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.
LarsDu88 17 hours ago [-]
The narrative that superintelligence is imminent is partially at fault here.
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.
Vexs 17 hours ago [-]
Observationally, for people that /aren't/ using models to code but to just do their white-collar job, claude.ai /is/ AI, now. The entire perspective for how to use AI is through claude skills, claude projects, claude cowork, etc. They've massively won the corp buy-in at the moment I believe.
rad-b 2 hours ago [-]
Fully agree, that’s how I see most of my less technical coworkers reason about using AI. “Is there a Claude skill for that?” is a question I hear multiple times a week.
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.
lelanthran 17 hours ago [-]
> The entire perspective for how to use AI is through claude skills, claude projects, claude cowork, etc
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...
rsoto2 16 hours ago [-]
doesn't matter. that just means they've incentivized all competitors to enter the market and let's be honest none of their tools are that novel.
I guess I’m thinking a lot of companies seem to be getting Claude code subscriptions. It usually takes some time and effort for an org to switch away from one solution. In the meantime a lot of workflows get more and more tied to Claude in particular.
It’s not much of a moat, but it’s more than a lot of orgs have.
bpavuk 17 hours ago [-]
obligatory correction: the semiconductor layer is still owned by TSMC and Samsung. Google sketches chip designs for them to implement - that's the lowest layer they control. I am not denying that this is impressive.
rsoto2 16 hours ago [-]
google might have tons of integration. But if it invested too heavily into AI then it will also suffer when increased competition causes returns to fall:
The moat is shifting from technology to access to proprietary training data. It doesn't matter how good your LLM platform is if you don't have good data to feed the training run. Public Internet data and published media is already mined out. Now the frontier LLM vendors have shifted to licensing proprietary data that's locked up behind corporate firewalls, and even hiring human domain experts specifically to create new training content in target verticals. You'll see the effects of this next year, although it might not be obvious to those who mostly only use LLMs for coding tasks in popular programming languages for which there was already a lot of training data.
lelanthran 17 hours ago [-]
> Now the frontier LLM vendors have shifted to licensing proprietary data that's locked up behind corporate firewalls, and even hiring human domain experts specifically to create new training content in target verticals.
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.
dragonwriter 16 hours ago [-]
> That's a losing proposition for any token provider
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.
pseudosavant 15 hours ago [-]
I've found that there is value in consuming AI services from your existing cloud provider. Customers and auditors have less of an issue with "we use AI services from AWS/Azure/GCP" if the data was already in those clouds and it doesn't expand the risks of data being breached, or trained on, by some other provider.
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.
solatic 17 hours ago [-]
AWS and Google at least own their own hardware (Trainium and TPUs, respectively). It's a moat in the sense that designing, building, and deploying your own chips at scale is quite a feat and not easily replicated. The vertical integration will allow them to continue to be profitable once the models get good enough and competitors' prices race to the bottom. Google has Gemini; AWS may not deploy its own models (yet?), but that's not necessarily a losing position, as long as the market is able to run models sourced elsewhere on Trainium and the price is right.
amlib 17 hours ago [-]
Isn't specialized hardware also a big risk? GPUs are more amenable to any big changes that may happen in the next 5, 10 years of AI research. Maybe we won't even be talking about LLMs anymore. Maybe matrix multiplication won't even be the main primitive.
moduspol 17 hours ago [-]
If matrix multiplication isn't the main primitive, I think we have a lot of pain coming our way.
amlib 16 hours ago [-]
Maybe that is far fetched, but I could see them specializing for some super high dimension multiplication and meanwhile 5 years later turns out "all you need" are 3x3 matrices and suddenly 90% of your specialized hardware is now dark silicon :)
foobiekr 16 hours ago [-]
Their "own" as in built by Marvell and Broadcom. Especially Trainium but also TPU4.
rsoto2 16 hours ago [-]
That's exactly what giant train corporations thought. "We own all the railways, we've squashed the competition"
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."
The adoption of standards like skills and agent setup helps a ton. Nobody wants to be locked into an AI vendor like with cloud systems in general. And companies can't hold on to the #1 spot across multiple areas for very long, so users are even more motivated to move their process and stack between coding tools and AI companies behind them like Claude code.
Vendor lock in cannot happen, or you're bankrupt.
twoodfin 18 hours ago [-]
Amazon Bedrock is probably middlemanning an insane amount of token consumption these days for the same reasons.
unreal6 18 hours ago [-]
Is Bedrock a "middleman?" I believe that they run all inference inside of AWS data centers, on their own infrastructure.
Their new endpoint even promises zero operator access [0]
Sure, but fundamentally they’re acting as a distributor of someone else’s product in the form of the frontier models. That’s a classic middle-man.
No value judgement. I think this is a fantastic strategy.
wmf 18 hours ago [-]
Weights are worth far more than data centers.
jimbokun 18 hours ago [-]
Why?
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.
twoodfin 17 hours ago [-]
If/when open-weight models do catch up (i.e. become the dominant product in demand), Amazon transitions from a middle-man to the supplier with the best economies of scale.
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.
lelanthran 17 hours ago [-]
> Weights are worth far more than data centers.
I dunno, hey. After all, I can't distill my competitors datacentres :-)
mikeweiss 17 hours ago [-]
You may not care, but a lot of people I know care what brand chat bot they use personally,. usually it's tied to trust and reputation more than anything else. People are fickle.
unreal6 18 hours ago [-]
> 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.
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.
anon291 18 hours ago [-]
Nvidia has a moat. Hardware is hard. No one really competes with them for general compute
FuriouslyAdrift 18 hours ago [-]
AMD Instinct is their direct competitor for compute and they are better per dollar, better per watt, and out competing on raw performance.
Only thing holding them back is fab capacity which nVidia keeps buying in bulk to keep them small.
HDThoreaun 18 hours ago [-]
AMD is held back by their interconnect and firmware disadvantage compared to nvidia. They’ve been trying really hard to create their own cuda, but rocM and HIP still aren’t very popular especially for research.
pocksuppet 18 hours ago [-]
And their repeated refusal to either implement CUDA or reimplement everyone's CUDA libraries on their own platform. They say that AMD never misses a chance to miss a chance.
anon291 18 hours ago [-]
Have you ever actually had anyone work with these chips? Developer ux on amd is terrible.
FuriouslyAdrift 16 hours ago [-]
Yes. We have a quad MI300A server and run several inference models on it. For $107k it has saved us so much money on tokens already and it's a heck of a lot faster than cloud services.
anon291 5 hours ago [-]
Do you do research? Because if you don't, then you're not the target market for general purpose AI compute chips.
lelanthran 17 hours ago [-]
> Have you ever actually had anyone work with these chips? Developer ux on amd is terrible.
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.
foobiekr 16 hours ago [-]
Nvidia's moat is the IBM, Microsoft moat:
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.
nradov 18 hours ago [-]
I thought that Nvidia's moat was more in CUDA? Hardware is hard but we've already seen other companies like Google design neural processors with compute efficiency close to Nvidia.
dsl 18 hours ago [-]
General compute is also the worst solution to the problem.
Nvidia's entire business is dependent on Google not being able to make TPUs fast enough.
foobiekr 16 hours ago [-]
Google would have to start selling them (the real ones, complete with interconnect) to third parties. If google does that, though, Nvidia is done.
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.
therobots927 18 hours ago [-]
Oh great, good to know the shovel seller has the market cornered.
Now back to the conversation, do any of the gold miners have a moat? Or is this a race to the bottom?
rawgabbit 18 hours ago [-]
Uhh. I actively and vocally avoid all things Microsoft. I see Microsoft and I immediately think buggy software with zero security.
esikich 18 hours ago [-]
That's fine, but your inexperience with large companies that are MS's bread and butter doesn't really give you any credibility here. It's the standard for a reason.
hobonation 18 hours ago [-]
Can concur. I hate them with a passion, but corps love them, and I hate to say it... with good reason.
They're the only player in the Identity-Document-Email-VM-Storage space that's even remotely unified.
dragonwriter 16 hours ago [-]
Maybe so, but you clearly aren’t a representative sample of corporate decision-makers when it comes to AI (or broader IT) services.
PedroBatista 7 hours ago [-]
Old samurai lost his marbles and his heir to the throne is busy making kingdom ending deals pretending to be an Hollywood mogul.
Life is good, I guess.. Java people should start sweating.
SwellJoe 15 hours ago [-]
Good riddance. Maybe if the trash-tier AI plays get knocked out I'll be able to buy memory and GPUs again.
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.
chaitanyya 17 hours ago [-]
in all our hearts they were always rated CCC
steve1977 17 hours ago [-]
Oh no.
Anyway...
measurablefunc 18 hours ago [-]
What happens when Oracle can't pay the interest on their loans?
ceejayoz 18 hours ago [-]
They'll use their purchases of TikTok and Paramount to campaign for a bailout.
llm_nerd 17 hours ago [-]
Campaign? They're friends of the administration, and the US is firmly in the kleptocracy stage now (the last wrungs of democracy are about to be undone this Thursday evening).
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.
ceejayoz 17 hours ago [-]
The administration isn't fully immune to public opinion yet.
triceratops 17 hours ago [-]
Public opinion seems immune to reality though.
platevoltage 17 hours ago [-]
If you look back to what he has been able to get away with, and still get re-elected, I'd say he is.
ceejayoz 17 hours ago [-]
Nah, they tried the invulnerable thing. They tried really, really hard to avoid the "chaos in the White House" firings from the first term. Noem wrecked it.
lelanthran 17 hours ago [-]
> 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.
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 :-)
platevoltage 17 hours ago [-]
The Republican strategy has moved away from swaying public opinion for a while now. Now their strategy is to manipulate voting maps, intimidate voters and suppress votes in areas likely to vote against them.
The Iran war is unpopular, but they did it anyway.
tialaramex 15 hours ago [-]
It doesn't matter anyway. The US is done. The empire's peak was towards the end of last century. That's one reason the nostalgia play works so well. A Trump supporter in 2026 can see that their past looks better than their future, they're just wrong to imagine that they can do anything about that.
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?
saturn8601 15 hours ago [-]
The UK empire is considered by many to have ended in 1947 with the independence of India. Others say it was finally finished in 1997 with Hong Kong. Either way the UK is still around and while things aren't rosy, they still trudge along and will continue to do so.
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.
tialaramex 10 hours ago [-]
Obviously the UK didn't vanish in a puff of smoke and nor will the US. America doesn't cease to exist it is just gradually ceasing to matter as I said.
saturn8601 7 hours ago [-]
I guess I didn't explain it clearly enough. For the US to stop mattering some other big guy will have to start mattering. I just don't see any country really taking on that mantle anytime soon. Maybe we are in a global decline and the only goal for the two big gorillas in the world is to outlast the other and only after that worry about what comes next.
llm_nerd 17 hours ago [-]
> A little bit dangerous for a US administration (any US administration) to do a bailout of unloved companies just before a midterm.
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?
mjcl 18 hours ago [-]
They can sell the software business to broadcom.
panzagl 17 hours ago [-]
The result would turn into that concentrated evil black lump from Time Bandits
dj_axl 18 hours ago [-]
They can rent out their AI infra to The Hyperscalers.
lelanthran 17 hours ago [-]
> They can rent out their AI infra to The Hyperscalers.
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.
chrismustcode 17 hours ago [-]
Apart from SpaceXAI no?
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.
I think the hyperscalers are smart enough to not let Oracle be their landlord.
throwa356262 18 hours ago [-]
Are they?
Anthropic is renting compute from a competitor, that also is known for their blackhat business practices.
monocasa 16 hours ago [-]
Anthropic isn't a hyperscaler, but instead a hyperscaler customer.
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).
voidfunc 17 hours ago [-]
Their competitors eat them. I would not be surprised to see Oracle's cloud business get absorbed by IBM or Microsoft. Maybe Amazon. The extra DC capacity is valuable to a couple companies right now.
rawgabbit 18 hours ago [-]
They will ask tax payers for a bailout?
DrProtic 17 hours ago [-]
The lenders will then just report missed payments as revenue on their books.
noncoml 16 hours ago [-]
We will be able to afford RAM and SSD again
kibwen 18 hours ago [-]
Whatever happens, I can assure you that the Ellisons will remain multi-billionaires and the American taxpayer will manage to end up poorer, courtesy of their friend in the White House.
ratelimitsteve 16 hours ago [-]
people have been burning investor money for heat in re: AI for a few years now and it's starting to get chilly...
therobots927 18 hours ago [-]
This is surprising to me. Judging by what appears to be the common sentiment here on HN - which is that AI inference is already profitable, and OpenAI is fairly valued by private markets.
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?
cmiles8 18 hours ago [-]
The general fallacy of the “but inference is profitable” argument is that it tends to ignore all the costs of building and training the model. Given the fact that 1) that’s not trivial, and 2) the arms race underway means one can’t stop training, then it ruins the financial picture.
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.
an0malous 17 hours ago [-]
> The general fallacy of the “but inference is profitable” argument is that it tends to ignore all the costs of building and training the model. Given the fact that 1) that’s not trivial, and 2) the arms race underway means one can’t stop training, then it ruins the financial picture.
Or that it’s all hearsay and no one has released financials yet?
marcosdumay 15 hours ago [-]
xAI financials are public, and OpenAI financials leaked a short while ago.
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.
surgical_fire 14 hours ago [-]
> That's the best possible interpretation of them.
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.
marcosdumay 13 hours ago [-]
That.
I'm personally on the team that think it's honest. But then they have to explain why their marketing numbers are so weird.
therobots927 12 hours ago [-]
I don’t know how $5B+ in marketing for OpenAI is actually possible.
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.
cmiles8 11 hours ago [-]
“Marketing” typically includes all the people in solutions architecture, developer advocacy, compute credits, and many other things. It’s a ton more than just advertising spend, which is often a minority of what appears on that line item. Given that it’s very plausible those sort of sums are realistic.
nunez 5 hours ago [-]
SA is sales. DevRel is usually technical marketing.
surgical_fire 11 hours ago [-]
My charitable guess is that they lump the compute expense for free users as "Marketing".
My less than charitable guess is that the leaked financials is a piece of fiction intended to make inference not look unprofitable.
therobots927 11 hours ago [-]
I see what you mean. If they are using it for customer acquisition, it could fall under sales and marketing.
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.
cmiles8 17 hours ago [-]
Well there is clearly also a lot of non-GAAP style “trust us bro” things going on too which generally boil down to “if you ignore all the reasons why we’re not profitable then we’re profitable.” It’s WeWork’s “community adjusted EBITDA” messaging repackaged.
CamperBob2 17 hours ago [-]
If the company who holds the mortgage wanted to own the building, they would have just bought it themselves. They don't, for whatever reason, so to some extent they have an incentive to help their customer succeed.
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.
twoodfin 18 hours ago [-]
Good question.
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.
jimbokun 18 hours ago [-]
HN has been split on this question, with both pro and con strongly and vigorously argued.
darkwi11ow 18 hours ago [-]
Inference might be profitable, but it does not mean the profits of AI datacenters will rise in future. Open weight models and local AI already put the pressure on the AI datacenter profit margins, and local AI is set to become much more efficient in the future.
17 hours ago [-]
lbrito 18 hours ago [-]
I think those are just the loud minority. I wouldn't be surprised if they're like 20-30% if a poll were made here
chasd00 15 hours ago [-]
it is isn't enough for inference to be profitable, the whole organization has to be profitable enough to keep investors from looking elsewhere for a return.
therobots927 12 hours ago [-]
I agree but I don’t want to concede that point. There’s no evidence that inference is profitable which makes the rest of the conversation a non-starter.
When dealing with sophists you have to pin them down on specific points and prevent them from shifting the conversation.
3848484894 17 hours ago [-]
That sentiment only seems to pop up in Anthropic / OAI threads, wonder why
Zsfe510asG 18 hours ago [-]
There is AI data center overcapacity already. The KOSPI crashed last week, and it's a leading indicator for the cyclical hardware industry. It already had been that indicator in the 2000 bubble.
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.
tmp10423288442 17 hours ago [-]
The KOSPI went up already 125% in the past year, so some sort of correction was inevitable, even if the underlying companies are healthy. The crash has been exacerbated by South Koreans levering up heavily in the past few months and now getting wiped out.
lelanthran 17 hours ago [-]
> I don't know what possessed Ellison to ruin a functioning company,
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.
therobots927 18 hours ago [-]
Well it seems like he bought the “AGI is 2 years away” line. As did… pretty much everyone in Silicon Valley.
I remember one thing that struck me when skim reading that the first time:
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.
> [mid-2026] But China is falling behind on AI algorithms due to their weaker models.
protocolture 13 hours ago [-]
Website is just "What if line go up forever"
KerrAvon 16 hours ago [-]
Wow. That has aged hilariously poorly indeed. OMG.
> 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.
surgical_fire 14 hours ago [-]
There are people who repeat this crap on HN all the time.
pphysch 16 hours ago [-]
This AGI silliness is predicated on a flawed "Platonic" view of epistemology. The notion that there is some well-defined "idea space" and therefore superintelligence can explore that space faster than any human. In fact, there is no such space. There is a "token space" that can be explored, but that has only fleeting overlaps with reality.
therobots927 16 hours ago [-]
It also completely ignores what we know about evolution. Our brains are the result of billions of years of natural selection. The amount of “training data” that resulted in our neural structures is on a completely different scale than the training data used for today’s LLMs. And this isn’t even up for debate.
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.
AlexandrB 17 hours ago [-]
If/when the AI bubble pops, this website will be really funny. I guess it's already funny. This is what it shows for Apr 2026:
> Reliable Agent copies thinking at 13x human speed
Still waiting for a reliable agent to think at any speed.
surgical_fire 14 hours ago [-]
Another evidence that rich assholes are not necessarily very intelligent.
They are just rich. And also assholes.
AlexandrB 17 hours ago [-]
The ability of Silicon Valley to hype itself up into a frenzy is unparalleled. Apparently nothing was learned from "blockchain for everything" and "we're going to live in the metaverse".
wil421 15 hours ago [-]
Don’t forget Big Data!
therobots927 15 hours ago [-]
Big data was the progenitor of this mess
kittikitti 16 hours ago [-]
“We don’t mind losing customers”
Former Oracle CEO on their unwavering support for Israel.
rcbdev 5 hours ago [-]
> “We don’t mind losing customers” Former Oracle CEO on their unwavering support for Israel.
They'll be fine.
xyst 17 hours ago [-]
I can’t wait for Ai bubble to bust already. Maybe it will happen in October/November like the crypto hype.
Apocryphon 18 hours ago [-]
Imagine if their acquisition of TikTok had gone through.
pocksuppet 18 hours ago [-]
Wait, they don't own US TikTok? Who does?
thewebguyd 17 hours ago [-]
TikTok USDS Join Ventures LLC owns 80%, ByteDance still owns a minority stake.
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.
Apocryphon 17 hours ago [-]
I thought it was only 15% of the company.
tflinton 18 hours ago [-]
[flagged]
groundzeros2015 17 hours ago [-]
Bond rating is about financial solvency, not goodness.
polycancel 16 hours ago [-]
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black_13 16 hours ago [-]
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pedrosuave 15 hours ago [-]
Is just wild to me people thinking ai is tulip fever or a massive bubble when every part of my life ai is entering. Even these forums 35 percent of posts are ai or vibe code related. At work (medical field) ai is replacing scribes and it can read an ecg better than your average doc. TSMC and chip companies are using in their pipelines. Pharm and bio companies are using. Archeologists are using to decode scrolls and find new petroglyphs. Education and tutoring will never be the same ... kids got lucky having YouTube but now you basically have your private tutor. Vfx is being infiltrated. Computer security. I look around and robots are delivering my food and waymo is picking me up. I turn on the news and in the last couple months Ukraine is now using ai targeting on their drones in addition to the machine vision. My apartment complex recently had a renovations and paint job and my landlord showed me how they designed the color scheme and renovations with chat gpt before getting a crew to do the work. I made an app for my family photography contest for the first time something I never dreamed of at 40 years old with no programming knowledge. I updated my framer website faster than I ever have with Ai.
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
ductsurprise 14 hours ago [-]
Should(or When) said 'bubble' 'pop', AI isn't going away or expected to lose relevance.
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'.
jghn 15 hours ago [-]
People said similar things leading up to the dot com crash. The commercialization of the internet was indeed a watershed moment. That didn't mean it wasn't a bubble. Both can be true at the same time.
Schiendelman 15 hours ago [-]
People whose job is writing code want it to be a bubble. It's probably not.
LBMs will eat robotics, and that alone will eat a double digit percentage of labor.
minraws 16 hours ago [-]
It's still a bunch too high should be below junk imho
qurren 17 hours ago [-]
Wasn't Tesla rated an F while it was in its hyper growth phase?
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.
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?
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
Never buy derivatives as a non institutional investor.
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.
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.
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?
but it is possible to do safely. i’m a few decades in now
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.
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.
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.
#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.
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.
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.
I dunno.
"The market can remain irrational longer than you can remain solvent"
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.
> 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.
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.
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.
Of course not, but it is a hedge, is it not? What would be your preferred hedge in this scenario?
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
Nice strawman, but that's not what I said.
They can, and do, intervene in things like lying to investors to inflate valuations.
Information is only relevant in the long term, in the short term the stock market is about FRIENDSHIP.
Just friendship and love :)
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
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)
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.
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.
Many companies use OCI for their Oracle DBs, as I believe they get some sort of discount when run this way.
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.
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.
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
I'm skeptical Oracle fits into the wider SaaS business category vs enterprise sales.
Uh, good luck guys.
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.
[1] https://en.wikipedia.org/wiki/Heise_Group
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.
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
https://www.youtube.com/watch?v=2J2Fb1bBufA
G. A. H.
edit: Y'all downvoters want genAI in your cars?!
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.
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.
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.
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...
https://www.youtube.com/watch?v=2J2Fb1bBufA
It’s not much of a moat, but it’s more than a lot of orgs have.
https://www.youtube.com/watch?v=2J2Fb1bBufA
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.
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.
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."
https://www.youtube.com/watch?v=2J2Fb1bBufA
Vendor lock in cannot happen, or you're bankrupt.
Their new endpoint even promises zero operator access [0]
[0] https://aws.amazon.com/blogs/machine-learning/exploring-the-...
No value judgement. I think this is a fantastic strategy.
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 :-)
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.
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.
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.
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.
Now back to the conversation, do any of the gold miners have a moat? Or is this a race to the bottom?
They're the only player in the Identity-Document-Email-VM-Storage space that's even remotely unified.
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 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.
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?
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...
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).
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.
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.
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.
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.
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.
> Reliable Agent copies thinking at 13x human speed
Still waiting for a reliable agent to think at any speed.
They are just rich. And also assholes.
They'll be fine.
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.
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
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'.
LBMs will eat robotics, and that alone will eat a double digit percentage of labor.