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.
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.
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?
Never buy derivatives as a non institutional investor.
Wouldn't it be wiser to get out of the market into fixed rate assets like government bonds?
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...
#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.
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 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.
I dunno.
"The market can remain irrational longer than you can remain solvent"
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?
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.
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.
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.
Is Meta even in this race anymore?
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.
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.
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.
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.
"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.
Information is only relevant in the long term, in the short term the stock market is about FRIENDSHIP.
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.
Of course, when your “customers” are just self-dealing, that’s also not a great sign.
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
Uh, good luck guys.
Wouldn't want to be negative at a time like this.
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
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.
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...
It’s not much of a moat, but it’s more than a lot of orgs have.
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.
G. A. H.
edit: Y'all downvoters want genAI in your cars?!
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.
I dunno, hey. After all, I can't distill my competitors datacentres :-)
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.
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.
Nvidia's entire business is dependent on Google not being able to make TPUs fast enough.
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.
Anyway...
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.
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.
> Reliable Agent copies thinking at 13x human speed
Still waiting for a reliable agent to think at any speed.
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.
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.
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 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.
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.