Oracle's core business is healthy as fuck. It can't default. It could get into a long period of low R&D since all profits would be directed to serve their debt and that could hurt their product line, but they'd definitely can't just vanish into thin air.
It's clear that American capitalism and AI are now fully intertwined. Either they both collapse or they both succeed. This bubble is actually too big for the government to bail out and if it tries it'll probably just bring the American dollar down with it, like tying helium balloons to the Titanic.
at the start of the pandemic when employees were confused and worried about their families larry emailed his entire company informing them that due to everything going on he was going to permanently move to his private island and "make it a better place with the locals" dude is scum and a colonizer at heart.
Oracle does not have any proprietary IP that OpenAI depends on. That means Oracle is providing commodity services to OpenAI.
AI hardware is advancing rapidly. If NVIDIA's next generations deliver radically more tokens per watt and per dollar, an Oracle facility designed, financed, and contracted around an older GPU generation can be overtaken before it is fully online or fully monetized.
That's a big risk.
And to finance this they are making deep cuts to the ERP business where Oracle does have proprietary IP.
> If NVIDIA's next generations deliver radically more tokens per watt and per dollar,
> an Oracle facility designed, financed, and contracted around an older GPU
> generation can be overtaken before it is fully online or fully monetized.
Every user of Nvidia's gear has thought of this, and Nvidia provides a solution: Newer components are (usually) compatible with older racks, and Nvidia will buy back parts you replace with newer hardware.
For example, let's say you have an NV72 with Blackwell-ultra. Rubin comes out, and you decide you want to upgrade. There is a SKU of Rubin designed specifically to work in the racks shipped with Blackwell. Use it, and you only need to replace the compute board (not the power system, cooling, networking, etc.)
Nvidia will buy back the Blackwell boards you remove (and sell them to someone else, with a warrantee).
If you want to do an upgrade that increases power use, you may have to get a new rack. All of the parts are modular, and all parts can be sold back to Nvidia.
Nvidia does this because they have to. Without it, many customers would consider other vendors when upgrading, or delay purchases in case something better comes along later.
"Only" is doing a lot of heavy lifting here, considering that this compute board makes up the majority of the cost. And if they start going with bigger designs, like they’re doing now (compute in memory, custom TPUs etc), then even this won't hold.
> If you want to do an upgrade that increases power use, you may have to get a new rack.
Blackwell to Rubin upgrade is exactly that case.
3x3U 110 kW units vs the 8×1U 33 kW shelves typical in GB300 NVL72, power whip rating rises to 100A from 60A, rack coolant flow doubles versus GB300, and both compute and NVSwitch trays are fanless, 190-230 kW per rack depending on power mode vs about 140 kW for GB300 NVL72 and NVLink switching is new too etc
And where is your source about buyback program? I found no Nvidia trade in or buyback program for data center hardware. Used gear is resold through third parties, ITAD vendors like Procurri and Bitpro buy and resell used GPUs from hyperscalers, and resellers like Alta Technologies sell refurbished units with warranties.
The closest real thing is a financing arrangement announced in August where Nvidia partnered with Apollo, BlackRock, Blackstone, and others and in SOME CASES may provide residual value support for up to 25% of an opportunity, assessed project by project. So in practice, if a borrower defaults and the lender has to liquidate GPUs that can't fetch their booked value, Nvidia covers part of the shortfall. That backstops lenders. It is not a buyback for customers who upgrade.
The real shame with all of this is that when (not if) the AI bubble pops, it's going to be like the 1990's, when there was a huge supply of unix workstations, etc.
The difference is that none of this Nvidia gear can run on normal 120V (or even 240V) circuits, so it'll end up going to the landfill or just being powered down in place.
If I acquire some cheap H200s, I intend to build a rack mount power supply that I can feed from a dryer plug. 4x H200's need about 2.8KW, which you could pull from a standard 240VAC 20A dryer/oven breaker [0].
I'm not really sure they have thought this through. Or at least their solution has been to essentially insulate the company and even the physical building from the debt used to buy the GPUs. These SPVs typically lease the building and secure the debt to the GPUs themselves so if it all goes pear-shaped, it'll be the debtholders who are left holding the bag, priamrily.
But I have questions:
1. How often do GPUs fail? I've seen figures that this is as high as 9% annual failure rate for DC GPUs;
2. How easy is it to get replacement stock? At what cost?
3. If you trade in, what value do you get for your GPUs?
4. What is the availability like? How does NVidia decide who gets the next wave of GPUs? That's NVidia's big power here. It's a bit like how Boeing and Airbus decide on customer order and if you upset them, you may lose other orders. This happened to Qatar Airways over the A380 [1].
5. How long are the current form factors and interfaces going to last? How long before the power requirements get larger than what DCs are currently built for? Blackwell GPUs use a lot more power than, say, 2 or even 1 generation ago did.
GPUs are a huge cost factor, allegedly more than 50% of the cost of a data center [2]. If you take a bath on the trade in and are forced to do it because you can't compete with the current generation's performance-per-watt, that's not a good situation to be in.
I understand that trucking the natural gas into the generation plant is one workaround.
"For this whole layered scheme [of Project Jupiter] to work, the campus needs as much power as a major city — think Los Angeles. Hooking into the existing grid turned out to be a problem. The workaround: generate power on site with fuel cells running on natural gas.
”The gas is supposed to come through a new pipeline spur that still has to be built. Most of the route crosses federal land, but about half a mile runs across state land. And that’s exactly where everything got stuck: on March 31, 2026, the New Mexico State Land Office denied the right-of-way, and on July 16 it rejected the second application. The pipeline, originally due to go online in August 2026, has been pushed back to February 2027.
”On top of that, the air permit for the entire power system still hasn’t been issued: the state Environment Department’s decision isn’t expected before November 23.
”Meanwhile, local opposition keeps gaining ground — as does the nationwide movement against hyperscale data centers."
I'm no fan of Oracle, but you could make the same claim about land developers, or datacenter operators, or REITs. Or a random conglomerate like Unileaver or GE or Siemens.
Ultimately, someone has to provide "commodities", and if you think your ship is the right vessel to do it betting hard on this is some kind of strategic direction.
Whether they are right, and to what extent debtors and the market will put up with cyclic and performance issues, etc.. I certainly won't hold the stock, but I wouldn't have earlier either.
Sometimes I wonder if the people committing and spending this much money is really thinking about this or not?
My feeling is there is some kind of upgrade packaging done here. Like if the chips advance by X factor it can be offered at a massive discount or something? Otherwise it seems so silly to buy so much hardware which is evolving so fast.
ERPs are done. Data center permits, space, contracts to buy scarse GPUs and energy are the moats today. The chips can provide more tokers per watt but the world needs exponentially more tokens each day
Curious to know why you think ERPs are done. I actually do somewhat agree with you in that their best days are behind them.
It is going to be incredibly difficult to bill outrageous amounts for armies of consultant to implement or customise the product when agents can do the same for much less, or at-least a 5-10x reduction in headcount for similar complexity of changeset.
If anyone is in the industry, please feel free to chime in as to what you are seeing on the ground.
> Curious to know why you think ERPs are done. I actually do somewhat agree with you in that their best days are behind them.
> It is going to be incredibly difficult to bill outrageous amounts for armies of consultant to implement or customise the product when agents can do the same for much less, or at-least a 5-10x reduction in headcount for similar complexity of changeset.
> If anyone is in the industry, please feel free to chime in as to what you are seeing on the ground.
I do not deal with ERPs, but my understanding is that one of their big selling points has to do with financial audit compliance. They're big complex, hulking things, but battle-tested an trusted. If you use one, your auditor can just check off the box, but if you use custom software, then the auditor has to audit that too (in order to make sure you get really complex things like computing tax correctly in each jurisdiction correctly).
They are so custom anyway that auditors need to audit them. Auditor familiarity is a point though. Audit is almost never about numbers, that’s the easy part, it’s about controls. Numbers will almost always come out right, the challenge is how they come in.
>Oracle does not have any proprietary IP that OpenAI depends on. That means Oracle is providing commodity services to OpenAI.
Huh? Is Oracle's plan with this funding to provide compute services for the big AI specialist companies? I assumed it was a buildout for their own AI services, as you're right, the former wouldn't make sense. (At risk of making a trollish, low-effort comment, OpenAI/Anthropic are savvy compute users and would have to be insane to risk getting entangled with Oracle.)
I read the article and I couldn't tell from it which of these is the case.
> In July, OpenAI and Oracle entered an agreement to develop up to 4.5 gigawatts of additional Stargate capacity. This represents a partnership that exceeds $300 billion between the two companies over the next five years.
When this all unwinds, I suspect that deal will have Trump's fingerprints all over it. There will also be sort of graft that screws over taxpayers, and somehow the money will never be returned.
On strictly business terms, you're absolutely correct. Considering that OpenAI and Oracle both eat from Trump's hand though, I think that Larry Ellison has a few tricks up his sleeve to remain a "necessary" contractor. This is probably a shorter-term investment to pad out the coffers 5-10 years from now.
If rampant despotism is the end-goal, Oracle has already aligned themselves with the despots.
A company that is purely in Denial, even doubling down at the risk of toppling the whole financial system should be placed under the financial equivalent of arrest and its leadership actually arrested. They're obviously playing with fire and it's alarming that no one's in the administration is batting an eye.
Oracle not able to provide its usual "services" would disrupt many institutions which unfortunately rely on their technology and assistance operating the often expensive and complex Oracle integrations they've set up, for better or worse. I really despise Oracle and the Ellisons and they don't need a bailout but I'd hate to see what could come from many significant collapses of technology for social institutions.
If Oracle suffered a massive financial collapse wouldn't all those aspects of its business that are needed and paid for "just" get sold off and be managed as a new entity? I quote just because it would be an enormous amount of paperwork and organizational restructuring, but people with enterprise scale money tend to get to keep the services they pay for.
This came up in the last discussion: The TL;DR is that shareholders go to zero, bond holders take a haircut and then own "new Oracle" (Opacle?) that can generally sustain itself with revenues from agressive JDK audits, RDBMS licenses, and ERP/PeopleSoft.
The technology would not collapse, only the equity owners' purchasing power would collapse. Ellison owns 40%, so the rest of society only loses 60% * $360B = $260B, which is not much in the grand scheme of things.
It's not dilutive -- current shareholders get $10B (or 97% of $10B, whatever). Market reaction is some combination of profitability concern / bankruptcy risk because Oracle is super leveraged and taking on even more debt. Maybe the AI hyperscalars will slow down spending in 2028.
Yes, even if the company raises $10b, the ownership stake and voting power of a share is reduced by 2.5%.
And if that $10b figure is a fixed target, then if the share price continues to fall, the more shares they will need to issue, resulting in even more dilution.
They're not worth more. The number of shares is increased by the amount that was issued. So that larger amount of equity is split among more shares.
A simple example:
Current equity of $100B, 100 shares outstanding. Each share is worth $1B, with 1% of voting power.
Then we issue $10B of equity via 10 shares.
Now we have equity of $110B, with 110 shares outstanding. Each share is still worth $1B, except each share now has 1/110 of voting power, instead of 1/100. Each share now only controls 0.91% of the company. Their ownership has been diluted.
edit: You can throw this comment thread URL into your favorite clanker (Claude, Gemini, whatever) and it will confirm exactly what I'm saying.
Mechanically, from a corporate finance perspective, the price per share doesn't change. Equity decreases or increases by the amount of the buyback or issuance. So in your example, a buyback of 1 share means equity becomes $90, and each share is still worth $10. Likewise for dilution, equity goes up to $110, share still remains at $10. The dilution refers to the ownership of the company, not the stock price.
However, in markets, a buyback is a positive signal (with increased EPS also) that can increase the share price.
The newly issued shares get sold by the company and the company gets that money for their investment/operations/whatever purposes.
So the new shareholders pay "into the pie" and the pie gets bigger, and the effect is that the old shareholders have a slightly smaller share of a slightly larger pie which, if the new shares were sold exactly at the market price, theoretically should have the exact same value - and in practice, assuming the decision to raise capital and invest is useful, usually results in a larger value.
The board can authorize issuing new shares up to the limit defined by the corporate charter (giving them the ability to raise capital as in this case). Issuing more shares beyond that or beyond the limits defined by the exchange rules go up to a shareholder vote. Shareholders can also sue to block things if there's shady stuff going on. Current shareholders aren't "made whole" there are just more shares and they now own less of the company.
Their shares are worth more as a result. Oracle's corporate charter has some provision for the number of shares they're allowed to issue and existing shareholders bought their shares knowing that. Increasing the authorized share limit requires shareholder vote.
Friends who worked at a telecom were told directly by Oracle salespeople that they were all-in on AI and that the software for telecoms that Oracle owns was being put into maintenance or sunset mode.
Previously, I thought investing in AI companies would be a good hedge against AI taking my job, but I hadn't considered the possibility that they fund the build out by issuing shares. Is there no reprieve?
The shares you own (usually) give you voting rights. Whether that makes any difference is another story.
But I'm not sure what people think the stock market is for? It exists primarily so that companies can access capital markets namely by issuing their own shares.
Historically for companies that were growing rapidly or had large capital needs, private markets weren't large enough to handle that. Times have changed, but the whole point of going public is to be able to raise capital by issuing shares.
maybe not. There could be mass unemployment and all the big dogs could also lose from the buildout while smaller players (non-public) take over. It could be a lycos / yahoo / google situation where there was no "winner" to invest in during the initial dotcom crash, and there was large-scale disruption all the same.
I'd like to note that "the sector which employs you" should be considered when talking about diversifying. (In general, not only when worried about the Robot Takeover.)
A long stretch of unemployment can be weathered by selling a bit from strong investments, and a crashing stock-market can be waited-out by staying firmly employed, but both simultaneously is what can force people to "sell low" just to pay regular expenses.
I’m not actually convinced they’re a good hedge because the market cap seems to presuppose a lot of success.
Phrased differently, I don’t see how these companies could grow their equity like Google or Amazon did way back when without having full AGI and changing the entire world. They would need to become worth more than the entire world’s current GDP added up.
There’s a big range on the spectrum where AI does well enough to mess up your life but not well enough to make you even moderately wealthy.
I think they are actually underpriced relative to "taking away" jobs. I personally believe ant at 1-2T is pretty reasonable if you consider claude to effectively be the "best devtool of all time," aka it literally writes all software for you.
I think (somewhat arbitrarily), to get to higher valuations, you are going to have to disrupt more than just the software business. Which is what most labs are trying with finance, biology, chemistry, law, etc. That might be enough for a few hundred billion in TAM more.
I think to get to a ~5T+ valuation, then we have to start thinking about AI meaningfully displaces classes of jobs, maybe in the single digit %'s. As in, _global_ SWE headcount starts going down, but revenues for software companies as a whole go up.
I think for ~10T+, you definitely need meaningful job displacement across most white collar sectors.
Claude is in (potentially) a price war and research and development arms race with OpenAI and Google, and potentially other labs, so I don't think it's necessarily a given to price it as the company with the "best devtool of all time".
> the fundraising was already outlined at an investor day last week
> “This seems to be exactly what they previewed,” said Rob Oliver, senior research analyst at Baird. “So I’m not sure why the market is freaking about it.”
Things I hope for:
- Oracle defaulting on its debt commitments.
- Anti trust action into Skydance forcing a breakup.
- Larry forced to cover the difference by selling family silver.
- Lanai going back into the hands of the people of Hawaii.
Just for the laughs and for forcing me to bear with some of the worst applications of all time.
Oracle's core business is healthy as fuck. It can't default. It could get into a long period of low R&D since all profits would be directed to serve their debt and that could hurt their product line, but they'd definitely can't just vanish into thin air.
What is their core business today? I remember when it was the enterprise database server product, but I can't imagine that is true anymore.
Aim higher
All the people who ever worked on Oracle iProcurement fired into a volcano?
> - Lanai going back into the hands of the people of Hawaii.
Lol, it's 2026: it'll just go to some other billionaire. Probably Marc Benioff. I heard he likes owning Hawaii.
Unfortunately, what will really happen is that they will receive a massive bailout from Main Street. Just like in 2008 for the banks.
The impact of AI hype failing at this point has become too big to fail in the eyes of "rugged" American capitalism.
It's clear that American capitalism and AI are now fully intertwined. Either they both collapse or they both succeed. This bubble is actually too big for the government to bail out and if it tries it'll probably just bring the American dollar down with it, like tying helium balloons to the Titanic.
1.) The Fed is tightening because of hot and worsening inflation
2.) The bubble pop doesn't pose systemic risk to the US economy
3.) AI companies hardly employ any Americans (that's the entire point)
4.) There's already direct precedent for letting the tech bubble pop (dotcom)
5.) AI is politically toxic with voters
6.) The bubble has been widely known to the public for YEARS while AI companies consciously ignored the risks and warning signs
7.) No amount of bailouts will fix a business model that sells $100 bills for $1
8.) The bailout would cost $30T (two thirds of the current US debt)
9.) The US government is broke at these debt to GDP levels
10.) A bailout is wishful thinking from AI bagholders
at the start of the pandemic when employees were confused and worried about their families larry emailed his entire company informing them that due to everything going on he was going to permanently move to his private island and "make it a better place with the locals" dude is scum and a colonizer at heart.
Be careful, rsoto2, it sounds like you're at risk of anthropomorphizing the lawnmower. [1]
[1] https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
lol
Lanai was passed between private owners for well over a century. it was never in the hands of "the people"
Natives collectively possessed all of Hawaii long before the concept of private ownership arrived.
Well over? It was taken by force about 130 years ago
Oracle does not have any proprietary IP that OpenAI depends on. That means Oracle is providing commodity services to OpenAI.
AI hardware is advancing rapidly. If NVIDIA's next generations deliver radically more tokens per watt and per dollar, an Oracle facility designed, financed, and contracted around an older GPU generation can be overtaken before it is fully online or fully monetized.
That's a big risk.
And to finance this they are making deep cuts to the ERP business where Oracle does have proprietary IP.
> If NVIDIA's next generations deliver radically more tokens per watt and per dollar,
> an Oracle facility designed, financed, and contracted around an older GPU
> generation can be overtaken before it is fully online or fully monetized.
Every user of Nvidia's gear has thought of this, and Nvidia provides a solution: Newer components are (usually) compatible with older racks, and Nvidia will buy back parts you replace with newer hardware.
For example, let's say you have an NV72 with Blackwell-ultra. Rubin comes out, and you decide you want to upgrade. There is a SKU of Rubin designed specifically to work in the racks shipped with Blackwell. Use it, and you only need to replace the compute board (not the power system, cooling, networking, etc.)
Nvidia will buy back the Blackwell boards you remove (and sell them to someone else, with a warrantee).
If you want to do an upgrade that increases power use, you may have to get a new rack. All of the parts are modular, and all parts can be sold back to Nvidia.
Nvidia does this because they have to. Without it, many customers would consider other vendors when upgrading, or delay purchases in case something better comes along later.
I would be very very curious in some source of these Nvidia buybacks
> you only need to replace the compute board
"Only" is doing a lot of heavy lifting here, considering that this compute board makes up the majority of the cost. And if they start going with bigger designs, like they’re doing now (compute in memory, custom TPUs etc), then even this won't hold.
> If you want to do an upgrade that increases power use, you may have to get a new rack.
Blackwell to Rubin upgrade is exactly that case. 3x3U 110 kW units vs the 8×1U 33 kW shelves typical in GB300 NVL72, power whip rating rises to 100A from 60A, rack coolant flow doubles versus GB300, and both compute and NVSwitch trays are fanless, 190-230 kW per rack depending on power mode vs about 140 kW for GB300 NVL72 and NVLink switching is new too etc
And where is your source about buyback program? I found no Nvidia trade in or buyback program for data center hardware. Used gear is resold through third parties, ITAD vendors like Procurri and Bitpro buy and resell used GPUs from hyperscalers, and resellers like Alta Technologies sell refurbished units with warranties.
The closest real thing is a financing arrangement announced in August where Nvidia partnered with Apollo, BlackRock, Blackstone, and others and in SOME CASES may provide residual value support for up to 25% of an opportunity, assessed project by project. So in practice, if a borrower defaults and the lender has to liquidate GPUs that can't fetch their booked value, Nvidia covers part of the shortfall. That backstops lenders. It is not a buyback for customers who upgrade.
What does Nvidia do with the parts they buy back? Resell to others or grind to dust?
Forward them to their, partner Microsoft…
[dead]
I doubt NVidia wants thriving second hand market, so I would guess grind to dust?
resell them? there is a decent market for people fine with less efficient, already used gear.
The real shame with all of this is that when (not if) the AI bubble pops, it's going to be like the 1990's, when there was a huge supply of unix workstations, etc.
The difference is that none of this Nvidia gear can run on normal 120V (or even 240V) circuits, so it'll end up going to the landfill or just being powered down in place.
If I acquire some cheap H200s, I intend to build a rack mount power supply that I can feed from a dryer plug. 4x H200's need about 2.8KW, which you could pull from a standard 240VAC 20A dryer/oven breaker [0].
[0]: https://www.sunbirddcim.com/blog/nvidia-h200-power-requireme...
What does it run on?
Not sure what they run on in 2026, but next year, 800V DC, 1MW per rack:
https://developer.nvidia.com/blog/nvidia-800-v-hvdc-architec...
I'm not really sure they have thought this through. Or at least their solution has been to essentially insulate the company and even the physical building from the debt used to buy the GPUs. These SPVs typically lease the building and secure the debt to the GPUs themselves so if it all goes pear-shaped, it'll be the debtholders who are left holding the bag, priamrily.
But I have questions:
1. How often do GPUs fail? I've seen figures that this is as high as 9% annual failure rate for DC GPUs;
2. How easy is it to get replacement stock? At what cost?
3. If you trade in, what value do you get for your GPUs?
4. What is the availability like? How does NVidia decide who gets the next wave of GPUs? That's NVidia's big power here. It's a bit like how Boeing and Airbus decide on customer order and if you upset them, you may lose other orders. This happened to Qatar Airways over the A380 [1].
5. How long are the current form factors and interfaces going to last? How long before the power requirements get larger than what DCs are currently built for? Blackwell GPUs use a lot more power than, say, 2 or even 1 generation ago did.
GPUs are a huge cost factor, allegedly more than 50% of the cost of a data center [2]. If you take a bath on the trade in and are forced to do it because you can't compete with the current generation's performance-per-watt, that's not a good situation to be in.
[1]: https://www.arabnews.com/business/qatar-airways-in-mystery-a...
[2]: https://orennia.com/insights/what-it-actually-costs-to-build...
This previous [flagged] post implies that a natural gas line blocked by regulatory action is holding an Oracle data center offline:
https://news.ycombinator.com/item?id=49978367
https://archive.ph/jDXdm
I understand that trucking the natural gas into the generation plant is one workaround.
"For this whole layered scheme [of Project Jupiter] to work, the campus needs as much power as a major city — think Los Angeles. Hooking into the existing grid turned out to be a problem. The workaround: generate power on site with fuel cells running on natural gas.
”The gas is supposed to come through a new pipeline spur that still has to be built. Most of the route crosses federal land, but about half a mile runs across state land. And that’s exactly where everything got stuck: on March 31, 2026, the New Mexico State Land Office denied the right-of-way, and on July 16 it rejected the second application. The pipeline, originally due to go online in August 2026, has been pushed back to February 2027.
”On top of that, the air permit for the entire power system still hasn’t been issued: the state Environment Department’s decision isn’t expected before November 23.
”Meanwhile, local opposition keeps gaining ground — as does the nationwide movement against hyperscale data centers."
I'm no fan of Oracle, but you could make the same claim about land developers, or datacenter operators, or REITs. Or a random conglomerate like Unileaver or GE or Siemens.
Ultimately, someone has to provide "commodities", and if you think your ship is the right vessel to do it betting hard on this is some kind of strategic direction.
Whether they are right, and to what extent debtors and the market will put up with cyclic and performance issues, etc.. I certainly won't hold the stock, but I wouldn't have earlier either.
Rubin is supposed to be 10x ... I hope b300 prices crash and I can pick up a few
Sometimes I wonder if the people committing and spending this much money is really thinking about this or not?
My feeling is there is some kind of upgrade packaging done here. Like if the chips advance by X factor it can be offered at a massive discount or something? Otherwise it seems so silly to buy so much hardware which is evolving so fast.
larry's big ego couldn't take it - being left out of the hypetrain.
he was living good - enjoying massive profits from his various moats but nah he had to risk it for the paramount deal, then stargate.
ERPs are done. Data center permits, space, contracts to buy scarse GPUs and energy are the moats today. The chips can provide more tokers per watt but the world needs exponentially more tokens each day
Curious to know why you think ERPs are done. I actually do somewhat agree with you in that their best days are behind them.
It is going to be incredibly difficult to bill outrageous amounts for armies of consultant to implement or customise the product when agents can do the same for much less, or at-least a 5-10x reduction in headcount for similar complexity of changeset.
If anyone is in the industry, please feel free to chime in as to what you are seeing on the ground.
> Curious to know why you think ERPs are done. I actually do somewhat agree with you in that their best days are behind them.
> It is going to be incredibly difficult to bill outrageous amounts for armies of consultant to implement or customise the product when agents can do the same for much less, or at-least a 5-10x reduction in headcount for similar complexity of changeset.
> If anyone is in the industry, please feel free to chime in as to what you are seeing on the ground.
I do not deal with ERPs, but my understanding is that one of their big selling points has to do with financial audit compliance. They're big complex, hulking things, but battle-tested an trusted. If you use one, your auditor can just check off the box, but if you use custom software, then the auditor has to audit that too (in order to make sure you get really complex things like computing tax correctly in each jurisdiction correctly).
They are so custom anyway that auditors need to audit them. Auditor familiarity is a point though. Audit is almost never about numbers, that’s the easy part, it’s about controls. Numbers will almost always come out right, the challenge is how they come in.
>Oracle does not have any proprietary IP that OpenAI depends on. That means Oracle is providing commodity services to OpenAI.
Huh? Is Oracle's plan with this funding to provide compute services for the big AI specialist companies? I assumed it was a buildout for their own AI services, as you're right, the former wouldn't make sense. (At risk of making a trollish, low-effort comment, OpenAI/Anthropic are savvy compute users and would have to be insane to risk getting entangled with Oracle.)
I read the article and I couldn't tell from it which of these is the case.
Yet, entangle they did: https://openai.com/index/five-new-stargate-sites
> In July, OpenAI and Oracle entered an agreement to develop up to 4.5 gigawatts of additional Stargate capacity. This represents a partnership that exceeds $300 billion between the two companies over the next five years.
When this all unwinds, I suspect that deal will have Trump's fingerprints all over it. There will also be sort of graft that screws over taxpayers, and somehow the money will never be returned.
> their own AI services
Oracle doesn't have any. And that's wise. Oracle makes good RDBMS servers. They suck at everything else.
Their JVM doesn't suck.
Is that why java is such a popular language these days?
On strictly business terms, you're absolutely correct. Considering that OpenAI and Oracle both eat from Trump's hand though, I think that Larry Ellison has a few tricks up his sleeve to remain a "necessary" contractor. This is probably a shorter-term investment to pad out the coffers 5-10 years from now.
If rampant despotism is the end-goal, Oracle has already aligned themselves with the despots.
A company that is purely in Denial, even doubling down at the risk of toppling the whole financial system should be placed under the financial equivalent of arrest and its leadership actually arrested. They're obviously playing with fire and it's alarming that no one's in the administration is batting an eye.
Oracle is small potatoes, it’s not toppling anything. If anything, Oracle’s demise would boost productivity.
Oracle not able to provide its usual "services" would disrupt many institutions which unfortunately rely on their technology and assistance operating the often expensive and complex Oracle integrations they've set up, for better or worse. I really despise Oracle and the Ellisons and they don't need a bailout but I'd hate to see what could come from many significant collapses of technology for social institutions.
Oracle the company filing for Chapter 11 protection doesn't mean Oracle the software stops running on all the machines it's installed on.
If Oracle suffered a massive financial collapse wouldn't all those aspects of its business that are needed and paid for "just" get sold off and be managed as a new entity? I quote just because it would be an enormous amount of paperwork and organizational restructuring, but people with enterprise scale money tend to get to keep the services they pay for.
This came up in the last discussion: The TL;DR is that shareholders go to zero, bond holders take a haircut and then own "new Oracle" (Opacle?) that can generally sustain itself with revenues from agressive JDK audits, RDBMS licenses, and ERP/PeopleSoft.
(Opacle == One Poor A-hole Called Larry Ellison)
The technology would not collapse, only the equity owners' purchasing power would collapse. Ellison owns 40%, so the rest of society only loses 60% * $360B = $260B, which is not much in the grand scheme of things.
And "the rest of society" are those buying BBB/BBB- bonds. This is a risk taken in exchange for higher interest rates.
That'll include some big retirement/investment funds, but it's not big funds blindly buying without considering the risk.
Just think of it as a final service shutoff. Clients have had 30 years to migrate off of Oracle. /s
Half of that would be in stocks, resulting in 2.5% dilution for shareholders at the current market cap. But the stock is down 8%.
First homeopatic share.
> But the stock is down 8%
It's down more than 60% since it peaked in September 2025.
It's not dilutive -- current shareholders get $10B (or 97% of $10B, whatever). Market reaction is some combination of profitability concern / bankruptcy risk because Oracle is super leveraged and taking on even more debt. Maybe the AI hyperscalars will slow down spending in 2028.
It’s literally dilutive. Current shareholders now only own 97.5% of the equity instead of the 100% they owned previously.
Yes, even if the company raises $10b, the ownership stake and voting power of a share is reduced by 2.5%.
And if that $10b figure is a fixed target, then if the share price continues to fall, the more shares they will need to issue, resulting in even more dilution.
They own a smaller portion of outstanding shares, but the shares they own are worth more. Their value doesn't decrease.
They're not worth more. The number of shares is increased by the amount that was issued. So that larger amount of equity is split among more shares.
A simple example:
Current equity of $100B, 100 shares outstanding. Each share is worth $1B, with 1% of voting power.
Then we issue $10B of equity via 10 shares.
Now we have equity of $110B, with 110 shares outstanding. Each share is still worth $1B, except each share now has 1/110 of voting power, instead of 1/100. Each share now only controls 0.91% of the company. Their ownership has been diluted.
edit: You can throw this comment thread URL into your favorite clanker (Claude, Gemini, whatever) and it will confirm exactly what I'm saying.
Issuing new shares is dilutive.
—
Stock buyback example:
There are 10 shares of ABC Corp, it has a market cap of $100. Each share is worth $10.
ABC corp buys back one share and destroys it, leaving 9 shares.
$100/9 shares=$11.11 per share.
—
Dilution example:
There are 10 shares of ABC Corp, it has a market cap of $100. Each share is worth $10.
ABC corp needs $10 so they sell one additional share which the board has authorized. There are now 11 shares.
$100/11 shares=$9.09 per share.
Mechanically, from a corporate finance perspective, the price per share doesn't change. Equity decreases or increases by the amount of the buyback or issuance. So in your example, a buyback of 1 share means equity becomes $90, and each share is still worth $10. Likewise for dilution, equity goes up to $110, share still remains at $10. The dilution refers to the ownership of the company, not the stock price.
However, in markets, a buyback is a positive signal (with increased EPS also) that can increase the share price.
Wait, how is this legal? How are current shareholders made whole?
The newly issued shares get sold by the company and the company gets that money for their investment/operations/whatever purposes.
So the new shareholders pay "into the pie" and the pie gets bigger, and the effect is that the old shareholders have a slightly smaller share of a slightly larger pie which, if the new shares were sold exactly at the market price, theoretically should have the exact same value - and in practice, assuming the decision to raise capital and invest is useful, usually results in a larger value.
The board can authorize issuing new shares up to the limit defined by the corporate charter (giving them the ability to raise capital as in this case). Issuing more shares beyond that or beyond the limits defined by the exchange rules go up to a shareholder vote. Shareholders can also sue to block things if there's shady stuff going on. Current shareholders aren't "made whole" there are just more shares and they now own less of the company.
Their shares are worth more as a result. Oracle's corporate charter has some provision for the number of shares they're allowed to issue and existing shareholders bought their shares knowing that. Increasing the authorized share limit requires shareholder vote.
https://en.wikipedia.org/wiki/Stock_dilution
Friends who worked at a telecom were told directly by Oracle salespeople that they were all-in on AI and that the software for telecoms that Oracle owns was being put into maintenance or sunset mode.
Oracle begging couldn’t happen to a nicer company, the only thing that can be said is bubble, bubble bubble…
I would assume it's to hire more lawyers.
Are they going to build a lawyer AI? They have the data for it.
Previously, I thought investing in AI companies would be a good hedge against AI taking my job, but I hadn't considered the possibility that they fund the build out by issuing shares. Is there no reprieve?
The shares you own (usually) give you voting rights. Whether that makes any difference is another story.
But I'm not sure what people think the stock market is for? It exists primarily so that companies can access capital markets namely by issuing their own shares.
Historically for companies that were growing rapidly or had large capital needs, private markets weren't large enough to handle that. Times have changed, but the whole point of going public is to be able to raise capital by issuing shares.
maybe not. There could be mass unemployment and all the big dogs could also lose from the buildout while smaller players (non-public) take over. It could be a lycos / yahoo / google situation where there was no "winner" to invest in during the initial dotcom crash, and there was large-scale disruption all the same.
I'd like to note that "the sector which employs you" should be considered when talking about diversifying. (In general, not only when worried about the Robot Takeover.)
A long stretch of unemployment can be weathered by selling a bit from strong investments, and a crashing stock-market can be waited-out by staying firmly employed, but both simultaneously is what can force people to "sell low" just to pay regular expenses.
The dotcom crash has nothing to do with the AI build out
I’m not actually convinced they’re a good hedge because the market cap seems to presuppose a lot of success.
Phrased differently, I don’t see how these companies could grow their equity like Google or Amazon did way back when without having full AGI and changing the entire world. They would need to become worth more than the entire world’s current GDP added up.
There’s a big range on the spectrum where AI does well enough to mess up your life but not well enough to make you even moderately wealthy.
Theoretically hedging would only work if the A.I. firms are not already priced for taking your job, right?
I have no opinion on whether they are.
I think they are actually underpriced relative to "taking away" jobs. I personally believe ant at 1-2T is pretty reasonable if you consider claude to effectively be the "best devtool of all time," aka it literally writes all software for you.
I think (somewhat arbitrarily), to get to higher valuations, you are going to have to disrupt more than just the software business. Which is what most labs are trying with finance, biology, chemistry, law, etc. That might be enough for a few hundred billion in TAM more.
I think to get to a ~5T+ valuation, then we have to start thinking about AI meaningfully displaces classes of jobs, maybe in the single digit %'s. As in, _global_ SWE headcount starts going down, but revenues for software companies as a whole go up.
I think for ~10T+, you definitely need meaningful job displacement across most white collar sectors.
Claude is in (potentially) a price war and research and development arms race with OpenAI and Google, and potentially other labs, so I don't think it's necessarily a given to price it as the company with the "best devtool of all time".
Not for people like us.
It actually is but very few people realized that yet. We are still at "it doesn't work it's a fluke" denial phase
build out and bail out are starting to seem very similar in these contexts.
At this point it's a race between "how much money are left in the market" and "profitability". And both are hard to predict.
Broadcom is waiting to buy up the pieces.
Buildout or Bailout?
Skynet finally? (Terminator movie used Oracle building as Skynet HQ, forgot which one)
We are b-roll in the skynet/oracle cinematic universe.
I hope nothing but the worst for Oracle as a corporation...though nothing against the technical talent there.
Misread the title at first as "to finance AI bailout".
LOL.. It is that under the cover.
hopefully their demise brings JavaScript back to the commons!
https://javascript.tm
Of all the companies in the world this is one of the ones I root against the hardest. Hoping for the worst outcome on this investment.
Yeah I hope they get bought by Broadcom, like VMWare and the board sends Larry straight to retirement.
What a punishment, free up your days to spend your billions...
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As an aside: that's just the problem: we don't anthropomorphize Larry Ellison, or his ilk.
If we did anthropomorphize people like him, he'd be in a lot more trouble than he is. Instead we legally and socially treat him like a lawnmower.
LOL..
I'm happy to see Oracle missteps here.
This is the equivalent of 2007 garbage CDSes.
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