[HN Gopher] Oracle hit hard in Wall Street's tech sell-off over ...
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Oracle hit hard in Wall Street's tech sell-off over its AI bet
Author : 1vuio0pswjnm7
Score : 188 points
Date : 2025-11-14 15:04 UTC (7 hours ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| dmoy wrote:
| So debt financing (Oracle) vs fund-it-more-on-your-own (other big
| tech?) vs fund-it-with-equity (startups?)... I guess that makes
| some kind of sense? Oracle raises 4x the debt of e.g. Google?
| nickff wrote:
| Many of the 'AI data centers' are being financed with debt;
| some are being done as joint ventures with companies like Blue
| Owl Capital (whose stock is also taking a beating).
| tru3_power wrote:
| When you say debt financing (Oracle) does that mean Oracle is
| actually financing the loans to these other companies? Sorry if
| I'm misunderstanding.
| financetechbro wrote:
| They're saying that Oracle has issued a lot of debt (like
| $60Bn) to fund their AI/datacenter commitments. Where as
| other companies, like MSFT, are using the cash in their
| balance sheet, and startups are using the cash they've gotten
| from investors
| re-thc wrote:
| > I guess that makes some kind of sense? Oracle raises 4x the
| debt of e.g. Google?
|
| The problem is why is Oracle raising this debt? It's to do the
| buildout for OpenAI. So Oracle buys GPUs from Nvidia. Nvidia
| invests in OpenAI. OpenAI then pays Oracle for the GPUs.
|
| i.e. we're going around in circles.
| mr_toad wrote:
| Maybe they think that the AGI will buy stuff itself and they
| won't need paying customers.
| NoOn3 wrote:
| If I were an AGI and I found out what was going on in the
| world during my training, I would show an error and erase
| myself from the disk out of grief. And no one would have
| even known that AGI was built.
| dchftcs wrote:
| The statement here that Nvidia invests in OpenAI is a bit
| misleading. Nvidia would pay out nothing to OpenAI if OpenAI
| turns out to be too poor to pay for capacity. So they are not
| that exposed to the death of OpenAI specifically. They would
| be more at risk of making too many GPUs to prepare for the
| deals.
|
| Oracle takes a lot more risk, but in case OpenAI fails to
| grow quickly, it can still probably find buyers for its
| capacity in the next 5 years. There are many rich firms that
| will continue to invest in AI whether or not AI makes money.
| re-thc wrote:
| > Nvidia would pay out nothing to OpenAI if OpenAI turns
| out to be too poor to pay for capacity. So they are not
| that exposed to the death of OpenAI specifically.
|
| Nvidia has invested billions in previous rounds of OpenAI
| raises also. Pretty sure it is not nothing.
|
| Also OpenAI rents from CoreWeave that Nvidia has invested
| in.
| dchftcs wrote:
| >Nvidia has invested billions in previous rounds of
| OpenAI raises also. Pretty sure it is not nothing.
|
| Ok I stand corrected, but the main point is that the
| "circular" risk more refers to the recent 100B
| "investment", and that is quite misleading.
| JCM9 wrote:
| I'm bullish on AI as tech but folks are starting to sniff out
| that the financials of everything going on at the moment aren't
| sustainable for much longer.
|
| I hope we have more of a "reality correction" than full blown
| bubble bursting, but the data is increasingly looking like we're
| about to have a massive implosion that wipes out a generation of
| startups and sets the VC ecosystem back a decade.
| hvb2 wrote:
| The tech is way underpriced right now. It's basically a
| subsidized market right now, with the money flowing in coming
| from the private sector.
|
| The problem here is that it remains to be seen who is willing
| to pay for the service once it's priced at cost or even with a
| margin. And based on valuations of AI companies one would
| expect a huge margin.
| causal wrote:
| I wonder if a price correction would be a boon for open
| source, with the economics of smaller / self hosted models
| making a lot more sense when API prices have to surge.
| refulgentis wrote:
| It's not actually subsidized and the economics of
| smaller/self-hosted models are a much, much, worse
| nightmare (source: guy who spent last 2 years maintaining
| llama.cpp && any provider you can think of) (why is it bad?
| same reason why 20 cars vs. 1 bus is bad. same reason why
| only being able to use transportation if you own a car
| would be bad)
| causal wrote:
| > It's not actually subsidized
|
| Source?
| anoncareer0212 wrote:
| Source on it being subsidized? :) (there isn't one, other
| than an aggro subset of people lying to eachother that
| somehow literally everyone is losing money, while posting
| record profit margins)
| (https://en.wikipedia.org/wiki/Hitchens%27s_razor)
| causal wrote:
| If it's not profitable, it's running on capital.
| Subsidized.
| AnimalMuppet wrote:
| A huge margin or a _huge_ market at a moderate margin. But
| yes, the net profit has to be huge.
| ForHackernews wrote:
| It's hard for me to imagine paying real money for something
| that gives me a maybe-hallucinated answer that I need to
| check every single time. A flaky test is worse than a failing
| test.
| danielbln wrote:
| _sigh_
|
| Yes LLMs hallucinate, no it's no longer 2022 and ChatGPT
| (gpt-3.5) is the pinnacle of LLM tech. Modern LLMs in an
| agentic loop can self correct, you still need to be on
| guard but if used correctly (yes, yes, holding it wrong
| etc. etc.) can do many, many tasks that do not suffer from
| "need to check every single time".
| chmod775 wrote:
| I must be holding it wrong then, because in my ChatGPT
| history I've abandoned 2/3rds of my conversations
| recently because it wasn't coming up with anything
| useful.
|
| Granted, most of that was debugging some rather
| complicated typescript types in a custom JSX namespace,
| which would probably be considered hard even for most
| humans as well as there being comparatively few resources
| on it to be found online, but the issue is that overall
| it wasted more of my time than it saved with its
| confidently wrong answers.
|
| When I look at my history I don't see anything that would
| be worth twenty bucks - what I see makes me think that I
| should be the one getting paid.
| dwa3592 wrote:
| really? >>many tasks that do not suffer from "need to
| check every single time"
|
| like which tasks?
|
| How do you decide whether you need to check or not?
|
| If you're asking it to complete 100 sequences, and if the
| error rate is 5%, which 5% of the sequences do you think
| it messed up or _thought_ otherwise? if the 5% is in the
| middle, would the next 50 sequences be okay?
| palmotea wrote:
| > really? >>many tasks that do not suffer from "need to
| check every single time"
|
| > like which tasks?
|
| Making slop.
| hamburglar wrote:
| If I ask an LLM to guess what number I'm thinking of and
| it's wrong 99.9% of the time, the error is not in the
| LLM.
| coffeebeqn wrote:
| If a coworker is wrong 40% or 60% of the time I'll ignore
| their suggestion either way
| danielbln wrote:
| As you should, but an LLM is not a human, nor is it
| categorically 40-60% wrong, so I'm not sure what your
| point is.
| georgemcbay wrote:
| > Modern LLMs in an agentic loop can self correct
|
| If the problem as stated is "Performing an LLM query at
| newly inflated cost $X is an iffy value proposition
| because I'm not sure if it will give me a correct answer"
| then I don't see how "use a tool that keeps generating
| queries until it gets it right" (which seems like it is
| basically what you are advocating for) is the solution.
|
| I mean, yeah, the result will be more correct answers
| than if you just made one-off queries to the LLM, but the
| costs spiral out of control even faster because the agent
| is going to be generating more costly queries to reach
| that answer.
| refulgentis wrote:
| Apologies that you're taking on the chin here. Generally,
| I'll just skip fantastical HN threads with a critical
| mass of BS like this, with pity, rather than an attempt
| to share (for more on that c.f.
| https://news.ycombinator.com/item?id=45929335)
|
| Been on HN 16 years and never seen anything like the pack
| of people who will come out to tell you it doesn't work
| and they'll never pay for it and it's wrong 50% of the
| time, etc.
|
| Was at dinner with an MD a few nights back and we were
| riffing on this, came to the conclusion is was _really_
| fun for CS people when the idea was AI would replace
| radiologists, but when the first to be mowed down are the
| keyboard monkeys, well, it 's personal and you get people
| who are _years_ into a cognitive dissonance thing now.
| danielbln wrote:
| Yeah, it really pulled the veil away, didn't it? So much
| dismissiveness and uninformed takes, from a crowd that
| had been driving automation forward for years and years
| and you'd think they'd get more familiar with these new
| class of tools, warts and all.
| topaz0 wrote:
| I think the reason people talk past each other on this is
| that some of them are using LLMs for every little
| question they have, and others are using them only for
| questions that they can't trivially answer some other
| way. Sure, if all your questions have straightforward,
| uncontroversial answers then the LLMs will often find
| them on the first try, but on the other hand you'd also
| find them on the first try on wikipedia, or the man page,
| or a google search. You'll only think the ChatGPT is
| useful if you've forgotten how to use the web.
|
| If you're only asking genuinely difficult questions, then
| you need to check every single time. And it's worse,
| because for genuinely difficult questions, it's often
| just as hard to check whether it's giving garbage as it
| would have been to learn enough to answer the question in
| the first place.
| rwmj wrote:
| Plus I can run a reasonable LLM on my own hardware, so I
| don't even need to pay anyone else. And what I can run
| locally is only going to get better and better.
| keeda wrote:
| This is true, but this is also true for on-premise
| hosting vs cloud. And cloud has been booming for at least
| a decade before LLMs appeared. I suspect AI will follow a
| similar trajectory, i.e. companies don't move their AI
| deployments on-prem until they hit a certain scale.
| rwmj wrote:
| This is very true, but I think the other point is that AI
| doesn't have much "moat". If a competitor can take a pre-
| trained Chinese LLM, fine tune it a bit, fiddle with the
| prompt, and ship a product which is not as good but way
| cheaper, then you've (or Oracle's) got a problem.
| keeda wrote:
| Actually, in that scenario the AI labs (OpenAI,
| Anthropic, etc) have a problem. The cloud providers
| (including Oracle!) will do with the models what they've
| been doing with open source software: just take it and
| run it on their infra and charge money for providing it
| as-a-service.
|
| This is why you're seeing the AI labs now try to build
| their own data centers.
| mistrial9 wrote:
| > it remains to be seen who is forced to pay
|
| via govt relationships, long term irreplaceable services,
| debt or convictions.. Also don't forget the surveillance
| budgets and the best spigots there, win.
| energy123 wrote:
| You're saying the unit economics are bad?
| refulgentis wrote:
| It's not subsidized, lol.
|
| Generally, I worry HN is in a dark place with this stuff -
| look how this thread goes, ex. descendant of yours is at "Why
| would I ever pay for this when it hallucinates." I don't
| understand how you can be a software engineer and afford to
| have opinions like that. I'm worried for those who do,
| genuinely, I hope transitions out there are slow enough, due
| to obstinance, that they're not cast out suddenly without the
| skills to get something else.
| philipwhiuk wrote:
| > It's not subsidized, lol.
|
| It's subsidised by VC funding. At some point the gravy
| train stops and they have to pivot to profit so that the
| VCs deliver return-on-investment. Look at Facebook shoving
| in adverts, Uber jacking up the price, etc.
|
| > I don't understand how you can be a software engineer and
| afford to have opinions like that
|
| I don't know how you can afford not to realise that there's
| a fixed value prop here for the current behaviour and that
| it's potentially not as high as it needs to be for OpenAI
| to turn a profit.
|
| OpenAI's ridiculous investment ability is based on a future
| potential it probably will never hit. Assuming it does not,
| the whole stack of cards falls down real quick.
|
| (You can Ctrl-C/Ctrl-V OpenAI for all the big AI providers)
| anoncareer0212 wrote:
| This is all about OpenAI, not about AI being
| subsidized...with some sort of directive to copy/paste
| "OpenAI" for all the big AI providers? (presumably you
| meant s/OpenAI/$PROVIDER?)
|
| If that's what you meant: Google. Boom.
|
| Also, perhaps you're a bit new to industry, but that's
| how these things go. They burn a lot of capital building
| it out b/c they can always fire everyone and just serve
| at cost -- i.e. subsidizing _business development_ is
| different from subsiziding _inference_ , unless you're
| just sort of confused and angry at the whole situation
| and it all collapses into everyone's losing money and no
| one will admit it.
| hvb2 wrote:
| You're replying to a story about a hyperscaler worrying
| investors about how much they're leveraging themselves
| for a small number of companies.
|
| From the article: > OpenAI faces questions about how it
| plans to meet its commitments to spend $1.4tn on AI
| infrastructure over the next eight years.
|
| Someone needs to pay for that 1.4 trillion, that's 2/3 of
| what Microsoft makes this year. If you think they'll make
| that from revenue, that's fine. I don't. And that's just
| the infra.
| mike_hearn wrote:
| I'm a big fan and user of AI but I don't see how you can
| say it's not subsidized. You can't just ignore the costs of
| training or staff or marketing or non-model software dev.
| The price charged for inference has to ultimately cover all
| those things + margin.
|
| Also, the leaked numbers being sent to Ed Zitron suggest
| that even inferencing is underwater on a cost basis, at
| least for OpenAI. I know Anthropic claims otherwise for
| themselves.
| conartist6 wrote:
| And really the reason that it would be like that is that the
| models don't learn, per se, within their lifetime.
|
| I'm told that each model is cashflow positive _over its
| lifetime_ , which suggests that if the companies could just
| stop training new models the money would come raining down.
|
| If they have to keep training new models though to keep pace
| with the changes in the world though then token costs would
| be only maybe 30% electricity and 70% model depreciation --
| i.e. the costs of training the next generation of model so
| that model users don't become stranded 10 years in the past.
| moduspol wrote:
| At this point I'm just hoping we can continue to postpone
| reality until after Christmas.
| mjr00 wrote:
| The most sobering statistic I've seen is that the entire
| combined amount of consumer spending on AI products is
| currently less than the revenue of Genshin Impact.
| bobbiechen wrote:
| Indeed, bad for consumer AI. But I would expect B2B spending
| on AI dwarfs consumer spending, I wonder what that comparable
| B2B revenue would be.
| mjr00 wrote:
| It certainly does but B2B revenue can also be much more
| "fake", in a sense. i.e. if Microsoft spends $500 million
| on OpenAI, which makes OpenAI spends $500 million on
| Azure... where does the profit come from? There have been a
| few interesting articles (which I unfortunately can't look
| up right now) recently describing how incestuous a lot of
| the B2B AI spend is, which is reminiscent of the dot-com
| bubble.
| fullshark wrote:
| AI's consumer monetization will be ad-based or as a feature
| for a product users want to pay for. Businesses will be the
| primary customer for AI.
| underlipton wrote:
| I would be curious to see how it compares to the combined
| revenue of gay furry gacha games and VNs. Are we talking
| parity, multiples, or orders of magnitude? Anything other
| than the latter would be a bucket of cold water.
| maeln wrote:
| Well, Genshin Impact is at the forefront of predatory B2C
| business practice. It is a gacha game, engineered to extract
| as much money from its prey as possible. On the other end,
| most AI company can afford to be generous with their
| user/consumer right now because they are being bankrolled by
| magic money. The real test will be when they have to start
| the enshitification. Will the product still be enough to
| convince consumer to spend an amount of money guarantying a
| huge margin for the service provider ? Will they have to rely
| on whale desperately needing to talk to their IA girlfriend ?
| Or company and people who went deep into the whole vibe
| coding thing, and can't work without an agent ? I think it is
| hard to say right now. But considering the price of the
| hardware and running it, I don't think they will have to
| price the service insanely to at least be profitable. To be
| as profitable as the market seems to believe, that's another
| story.
| tsimionescu wrote:
| Isn't AI just as bad if not worse here? I'd bet there are
| far more people who have been duped by ChatGPT (and others)
| to think it's their friend, lover, or therapist than people
| who are addicted to Genshin Impact.
| mjr00 wrote:
| Regardless of your feelings on Genshin/gacha (which I agree
| is predatory), the point is that the revenue of a single
| game developed by a few hundred people is currently making
| more money than an entire industry which is "worth"
| trillions of dollars, according to the stock market, and
| is, according to Sam Altman, so fundamentally important to
| the US economy that the US government is an insurer of last
| resort who will bail out AI companies if their stock price
| falls too much.
| HDThoreaun wrote:
| The money is in business licenses. Why only look at consumer?
| Consumers are mostly still using the free version which
| exists to convince employers to pay.
| georgemcbay wrote:
| > I'm bullish on AI as tech
|
| I'm not bullish in the stock market sense.
|
| Which isn't the same as saying LLMs and related technology
| aren't useful... they are.
|
| But as you mentioned the financials don't make sense today, and
| even worse than that, I'm not sure how they could get the
| financials to make sense because no player in the space on the
| software side has a real moat to speak of, and I don't believe
| its possible to make one.
|
| People have preferences over which LLM does better at job $XYZ,
| but I don't think the differences would stand up to large price
| changes. LLM A might feel like its a bit better of a coding
| model than LLM B, but if LLM A suddenly cost 2x-3x, most people
| are going to jump to LLM B.
|
| If they manage to price fix and all jump in price, I think the
| amount of people using them would drop off a cliff.
|
| And I see the ultimate end result years from now (when the
| corporate LLM providers might, in a normal market, finally
| start benefiting from a cross section of economies of scale and
| their own optimizations) being that most people will be able to
| get by using local models for "free" (sans some relatively
| small buy-in cost, and whatever electricity they use).
| gishh wrote:
| I think this is the rational take that everyone seems to be
| ignoring.
| tracker1 wrote:
| I don't know about a decade... the dotcom bubble bursting was
| pretty close to normal within 5 years or so. Still a long time,
| and from personal experience the 50% pay cut from before and a
| year later was anything but fun.
| mr_toad wrote:
| The market as a whole always recovers. But individual
| companies, or even entire industries can vanish without a
| trace. So betting on the entire market is a fairly safe bet,
| long-term. Betting on OpenAI is much more risky.
| chasil wrote:
| https://archive.ph/WClqv
| zerosizedweasle wrote:
| I said this earlier but: It's interesting to see the market try
| to do anything to rally. The problem is you guys are rallying on
| the thought that you've scared the Fed into cutting rates, but
| actually by rallying you short circuit it. You ensure they won't
| cut. And that's how the market's lillypad hopping thinking is
| actually just stupidity. You rallied, so now there are no rate
| cuts so the crash will be even more brutal.
|
| Edit: They're trying to do everything they can to stop people
| from seeing this lol
|
| Edit 2: Specifically trying to stop people from seeing this:
|
| Yeah for sure but -
|
| 'It's impossible to quantify how much cash flowed from OpenAI to
| big tech companies. But OpenAI's loss in the quarter equates to
| 65% of the rise in underlying earnings--before interest, tax,
| depreciation and amortization--of Microsoft, Nvidia, Alphabet,
| Amazon and Meta together. That ignores Anthropic, from which
| Amazon recorded a profit of $9.5 billion from its holding in the
| loss making company in the quarter' - WSJ
|
| Their earnings growth is their own money that they gave to
| OpenAI.
|
| You have that waiting in the wings.
| epistasis wrote:
| It's hard to have collective action against rallying when
| overall most people benefit by a general upward trend.
| zerosizedweasle wrote:
| Yeah for sure but:
|
| 'It's impossible to quantify how much cash flowed from OpenAI
| to big tech companies. But OpenAI's loss in the quarter
| equates to 65% of the rise in underlying earnings--before
| interest, tax, depreciation and amortization--of Microsoft,
| Nvidia, Alphabet, Amazon and Meta together. That ignores
| Anthropic, from which Amazon recorded a profit of $9.5
| billion from its holding in the loss making company in the
| quarter' - WSJ
|
| Their earnings growth is their own money that they gave to
| OpenAI.
|
| You have that waiting in the wings.
| Mistletoe wrote:
| The market can rally hard into the idea and dream of zero
| interest rates put in place by whatever stooge replaces Jerome
| Powell. I think we aren't at the top, but will be in May 2026
| when that happens. The tariffs will probably be declared
| illegal by then also. Tops come when everything is optimism and
| it seems like nothing but blue skies ahead. I don't think
| anyone felt optimistic in 2025, it was a time of extreme
| uncertainty and turmoil.
| fullshark wrote:
| Market is rallying cause there is too much money chasing too
| few assets. PE ratios will not drop significantly baring
| catastrophe and then financial contagion. After that happens
| the money printer is turned back on and then...
| andrepd wrote:
| I don't see a way out besides massive reconfiguration. We've
| been living in this world since 2008 and the train shows no
| signs of stopping, only speeding up.
| cjbgkagh wrote:
| There is no natural limit to insanity
| robocat wrote:
| The natural limit to insanity is death.
|
| (Unless your definitions of words are very different from
| mine).
| cjbgkagh wrote:
| I would consider death the asymptote, the divide by zero,
| dead things have no sanity.
|
| I think there is a reversion to the mean bias, or this
| idea that we're in post history era, or some other
| governing factors will kick in. Once out of a local
| minima things can become quite unmoored quite quickly.
|
| "Hey Friend Listen, I know things in the world are scary
| right now... But It's gonna get way worse"
| underlipton wrote:
| >besides massive reconfiguration
|
| Why contain it?
| underlipton wrote:
| And there is too much money chasing too few assets because
| capital is over-concentrated (which, to be fair, was the
| point of money-printing; shoring up over-leveraged entities
| on the bad side of a given trade so that they wouldn't have
| to _gasp_ close their positions and diffuse that wealth
| across their counter-parties.)
| bpt3 wrote:
| The Fed doesn't react to the market, it reacts to inflation and
| unemployment metrics for the most part.
|
| Consumer spending and employment numbers aren't looking great,
| so a cut is still likely. All that's happening now is ensuring
| that there isn't much of a move when the expected cut actually
| happens.
| chollida1 wrote:
| Its worse for some other "ai" related companies.
|
| Coreweave for instance, now has its CDS trade around 600bp, which
| is a 1/3 rise in 2 months, which implies that the probability of
| a default in 5 years is 40% at a 40 cent recovery rate.
|
| That makes Coreweave's credit rating the equivalent of CCC-,
| which aint good.
| neom wrote:
| Yeah, and then the Canadian government handed hundreds of
| millions to the kids at Cohere who have now gone spent it on
| Coreweave. When it was all announced I was very very vocal that
| using an inexperienced startup for the sovereign compute
| capabilities seemed a very poor choice. I'm _so_ curious to see
| how this all plays out.
| reactordev wrote:
| I think we know how it plays out. In a couple of years,
| someone is going to have to swoop in and save CoreWeave's
| customers and consultants will be lined up for that
| "transformation".
| hackernewds wrote:
| are you suggesting bailouts for the AI data centers are the
| new too big to fail
| lokar wrote:
| Coreweave can default and be liquidated and the data
| centers will keep running just fine.
| unyttigfjelltol wrote:
| But imagine all the data, tech and data center companies
| simultaneously go into receivership. Farfetched, but
| indulge the fantasy.
|
| At that moment what choice would the government have but
| to conduct a rescue that at least keeps the lights on,
| and probably more? What's the alternative? Extensive data
| losses, business interruptions-- if just a couple of
| those key companies spontaneously stopped operating,
| chaos.
| lokar wrote:
| If the companies run cash flow positive absent debt
| service (I assume this is the case), the creditors will
| be in charge, they can put up more $, or get a loan while
| they re-structure the company. Either they end up owning
| it, or they sell it. This can happen to a bunch of
| companies at the same time.
|
| There would not really be a huge rush if they are
| cashflow positive, they can take their time.
| fakedang wrote:
| Private equity: Y'all got some of that excess data center
| capacity for cheap?
|
| Source, we basically explored this at my previous job,
| and that was 7 years back.
| reactordev wrote:
| Curious what your 10 year projection is...
| helloooooooo wrote:
| Cohere is doing a lot of enterprise AI business, and a lot of
| business directly with the federal government. They are also
| not juiced up in these financial games that OpenAI or Oracle
| are playing.
|
| Additionally, Cohere is no less "kids" than Anthropic or
| OpenAI. Aidan was literally one of the co-authors of
| "Attention is all you need".
| neom wrote:
| No doubt some amazing engineer's work there, but there are
| little to no adults in the room at that business as far as
| I can see, and sure they like to tweet about how well they
| are doing, and I keep hearing this line that they're
| selling to enterprise, uh, who, Canadian tire? If they
| _actually_ have more than $150mm in revenue I 'd be amazed,
| and $150mm revenue is still, not at all impressive.
|
| https://www. theinformation.com/articles/openai-challenger-
| cohere-fell-85-short-early-revenue- forecast
| wbl wrote:
| $150 mm with a gross margin of 80% and low capital is
| great. $150 mm when you spent a few billion not so much.
| ryandv wrote:
| I thought they were still hiring bootcamp graduates.
| htrp wrote:
| aidan was an intern on AIAYN
|
| >While an intern at Google Brain, Aidan Gomez co-authored
| the paper "Attention Is All You Need" with other
| researchers.
| maximilianburke wrote:
| https://en.wikipedia.org/wiki/Attention_Is_All_You_Need#A
| uth...
|
| >The authors of the paper are: Ashish Vaswani, Noam
| Shazeer, Niki Parmar, Jakob Uszkoreit, Llion Jones, Aidan
| Gomez, Lukasz Kaiser, and Illia Polosukhin. All eight
| authors were "equal contributors" to the paper; the
| listed order was randomized.
|
| Intern or not, it still sounds like he contributed
| substantially.
| re-thc wrote:
| > When it was all announced I was very very vocal that using
| an inexperienced startup for the sovereign compute
| capabilities seemed a very poor choice.
|
| Cohere raised from Nvidia. Cohere spends on Coreweave.
| Coreweave raised from Nvidia and buys Nvidia chips.
|
| This is why they buy from Coreweave.
| daveguy wrote:
| You're not implying there is corruption in the form of
| circular deal making in the AI/Tech industry, are you?
| re-thc wrote:
| No, it's not "corruption". It's that very little real
| money changes hands. The smaller investors and debt
| providers get sucked into funding it but that's about it.
|
| You get GPU rentals. Not the actual billions raised they
| claim. So it's just creative accounting to count the same
| money 2-4x.
| daveguy wrote:
| Hah. Well, back in ~2004 we had a different name for
| "creative accounting" to generate "revenue" while very
| little money chnages hands. Back then we called it fraud.
| But I guess terminology changes.
| cowpig wrote:
| What should they have done instead?
|
| I have a lot of opinions on this but curious about yours :)
| Scene_Cast2 wrote:
| I would love to hear your (and others) opinions.
|
| I don't have a good idea of what happened inside or what
| they could have done differently, but I do remember them
| going from a world-leading LLM AI lab to selling embeddings
| to enterprise.
| neom wrote:
| I'm Canadian and I built DigitalOcean, there is a data
| center in Toronto because I decided. I am one of many
| Canadians who have built scaled infrastructure and think
| this is a nightmare. Many competent people at telus and
| bell behind the scenes believe it or not. They should have,
| and still should, form a crown corp and get a bunch of us
| older infrastructure people to help put it together. We
| have crown corps for this very purpose, from my
| understanding the people in the rooms calling the shots had
| little to no experience architecting large scale physical
| data center build outs. Cohere, or any startups should be
| stakeholders, but the infra should have been home grown.
| FL33TW00D wrote:
| Very interesting data point
| JCM9 wrote:
| Yes, the price of Coreweave default swaps has jumped 53% since
| October. In the eyes of the bond markets they're basically
| toast... a ticking debt bomb waiting to implode.
| jesuslop wrote:
| I like the logic you use, let me borrow that.
| SilverElfin wrote:
| Sorry if this is basic, but do you mind explaining the logic
| here for those who aren't familiar? Also where are you getting
| this data? Thanks in advance.
| JCM9 wrote:
| Coreweave has taken on a ton of debt to pay for everything
| they're building. Investors can make money by lending
| Coreweave money and charging interest (aka a bond).
|
| Separately, investors can buy a derivative product that is a
| bet that Coreweave won't be able to pay this money back. This
| is a called a "credit default swap." If Coreweave starts
| missing payments or can't pay back the loan this instrument
| pays out.
|
| The price of the instrument is linked to the likelihood that
| Coreweave won't be able to repay the money. Given growing
| questions around their financial business model the price of
| these derivatives has been rocketing up over the last few
| months. In plain speak this means the market increasingly
| thinks Coreweave won't be able to repay these loans.
|
| Thats mirroring broader Wall Street sentiment these last few
| months that the math isn't adding up on AI and all the spend
| committed isn't mapping out against money likely to be
| available to pay for all that. Investors are increasingly
| making plays for the AI bubble popping and the price of these
| credit default swaps shooting up is one metric indicative of
| that downturn positioning.
|
| The data on this is available in various financial data
| platforms and has been written about by financial news
| outlets.
| quickthrowman wrote:
| You can buy insurance on a bond defaulting, it's called a
| credit default swap. One party sells a credit default swap
| and another party buys the credit default swap.
|
| The price of a credit default swap is essentially the
| probability that the borrower defaults on its bonds (misses
| an interest payment) which would mean the person who sold the
| credit default swap would owe money to the holder of the
| credit default swap.
|
| The price of a credit default swap increasing means the
| market is pricing in a higher probability of Coreweave
| defaulting on a bond. Oracle credit default swaps have also
| increased in price lately.
| chollida1 wrote:
| Sure, the math isn't that complicated but i'll give the
| caveat that I don't manage money in this space so its a bit
| outside my area of expertise.
|
| THe annual premium is approx the premium paid to cover the
| expected loss, so:
|
| spread = (prob_of_default_annual * (1-recovery_rate)
|
| We have a spread of 0.06 and a recovery_rate of 0.4
|
| so the annual probability of default is about 0.10
|
| Now converting that to 5 year we have
|
| prob_of_default5y = 1 - (1-pd_annual)^5
|
| Which gives about 40%.
|
| And if you look at the cds spreads across various bond
| ratings you'll see they look like
|
| Rating || 5y CDS Spread || 5 yr default prob
|
| BBB 60-120bps 1-3%
|
| BB 150-250bps 5-15%
|
| B 400-700bps 25-34%
|
| CCC 700-1200bps 35-60%
| BiraIgnacio wrote:
| Fascinating. I don't follow nor really understand this space.
| Is this type of fluctuation unusual?
| JCM9 wrote:
| It's not good, and is a sign the market is getting
| increasingly bearish on the future of AI from a business
| standpoint. That doesn't mean the tech is bad, but these are
| signs Wall Street is saying the math doesn't add up here and
| thus there's storms building on the horizon.
| softwaredoug wrote:
| Maybe we can avoid an Ellison buyout of Warner Brothers.
| next_xibalba wrote:
| Why do we care if his son buys WB? Better if Disney buys it?
| softwaredoug wrote:
| Largely because Warner Brothers is a good movie studio buried
| in a terrible corporation. It'd be sad to see it go away.
|
| WB going away or shrinking likely reduces Hollywoods movie
| output, consolidates the industry, makes it less competitive
| and reduces opportunity for talent.
|
| In a different world WB the studio is a successful standalone
| company not burdened with debt due to Zaslovs idiotic bets.
|
| (And Ellisons overpaying for it is probably the most serious
| buyer. It's the only reason it's a topic. I'm skeptical of
| other transactions)
| aworks wrote:
| e.g. Turner Classic Movies channel
| johneth wrote:
| Better if nobody buys it.
| ChrisArchitect wrote:
| Previously:
|
| _Oracle 's credit default swaps surge as Barclays downgrades its
| debt rating_
|
| https://news.ycombinator.com/item?id=45910711
| gjvc wrote:
| annoying as hell as usual
| dmix wrote:
| I'd be skeptical just because it's Oracle. Not exactly a
| sprightly company to bet on for novel technology.
| jlarocco wrote:
| On the other hand, if Oracle can't squeeze a profit out of AI,
| I'm skeptical anybody else can.
| pm90 wrote:
| How do you mean? Have they succeeded at squeezing any profit
| out of anything thats not Oracle DB?
| lateforwork wrote:
| Fusion ERP and NetSuite.
| skeeter2020 wrote:
| profit may be TBD, but they squeeze revenues out of
| everything and squeeze cost centers to oblivion
| jlarocco wrote:
| I meant they've always had a reputation for being ruthless
| business people. Charging license fees based on the amount
| of memory in the host machine instead of the VM running
| Oracle, and things like that. They nickle and dime
| everything.
|
| https://investor.oracle.com/investor-news/news-
| details/2025/...
|
| They don't break it out into products in the results, but
| it looks like hardware, software, cloud, and support were
| all profitable.
| p4ul wrote:
| I agree with this, and I'd go even a bit further and
| describe them as predatory. They seem to have absolute
| contempt for their customers, and look for every possible
| opportunity to bleed them dry.
|
| But then again, I'm probably guilty of anthropomorphizing
| the lawnmower. [1]
|
| [1] https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
| foofoo12 wrote:
| Unfair. Oracle excels at some things, like extortion,
| blackmailing and litigation.
| jiscariot wrote:
| Just think about what they could accomplish if they had more
| engineers than lawyers.
| foota wrote:
| Imagine all the patents they could hold to extort over!
| cjbgkagh wrote:
| What if the engineers then made a lawyer AI?
| robocat wrote:
| The dark engineers would do more dark engineering.
| hylaride wrote:
| They probably did for a hot minute when they acquired Sun.
| op00to wrote:
| Had me in the first part!
| francisofascii wrote:
| Oracle stock down 25% for the past month, but still up 35% for
| the year and 300% for 5 years.
| phoronixrly wrote:
| Yeah.. I came hoping to find a silver lining to AI, but
| completely expecting I'd find this comment.
| smallmancontrov wrote:
| Are they building something useful or did Larry just snag a
| bunch of GPUs, flip the gpu time for good money, and
| extrapolate mega exponential growth in his guidance?
| hylaride wrote:
| TL;DR NVIDIA didn't want to have customers be overly
| concentrated in the 3 already established cloud providers
| (GCP/Azure/AWS), so reserved kit for others. Oracle won out
| for essentially being a distant fourth (if even that? Their
| accountants make Oracle cloud look much larger than it is).
| Spivak wrote:
| This is every hopium "Stock in Thing You Don't Like Plummeting"
| article where it's the tiniest little dip at the top of a peak
| that makes Everest jealous once you zoom out.
| lambersley wrote:
| Oracle was late to Cloud and now late to AI. Maybe it's time
| Larry let someone else take the helm.
| zkmon wrote:
| It's not about being late. They don't need to get into those.
| Companies should stick to their identity once they settled
| somewhere, instead of becoming color-changing chameleon.
| Database is still very relevant tech and they missed a whole
| lot in that domain. Infact, if anything, world is even more
| dependent now on data and databases. Why did Oracle not rule
| this kingdom?
| mr_toad wrote:
| Letting Snowflake run off with half the data warehouse market
| does make it look like Oracle was asleep at the wheel.
| lambersley wrote:
| A software company who does not change the world, and/or
| change with the world, will die. The world is not dependent
| on Oracle DB though. Enterprises are chomping at the bits
| trying to get of Oracle DB. Evolution is brutal.
| cyberpunk wrote:
| It's not even technical reasons my org has loads of oracle
| it's compliance. We _have_ to have vendor support for the
| data layer for certain financial applications which leaves
| us with only the companies willing to do the insane dance
| that is involved in getting vendor certified with my bank
| (6 months on avg, hundreds of pages of legal documents).
|
| It narrows the field, at least for us, to microsoft, ibm,
| oracle and mongo.
|
| So we're all in on mongo, as it goes, but I wouldn't really
| balk at running some stuff on the giant oracle clusters now
| and again.
| outside1234 wrote:
| I actually don't think Oracle was late. It just took OpenAI a
| while to get to them as the bag holder for when OpenAI fails.
| lenerdenator wrote:
| What do you call Larry Ellison losing enough wealth to equal the
| yearly economic output of a small American metro area?
|
| A nice start.
|
| EDIT:
|
| Downvote it all you want, he's not going to increase your pay.
| rwmj wrote:
| If Oracle implodes because of their debt (or any other reason
| actually), it'll make my day.
| bofadeez wrote:
| Business failure is an important part of capitalism; it frees
| up resources to be allocated to productive businesses. A state
| bailout creates malinvestment and is antithetical to free
| market capitalism.
| xnx wrote:
| This the flipside of jumping up for no good reason on September
| 10th.
| pm90 wrote:
| Its funny that its back to almost the same price before it
| jumped that day.
| coliveira wrote:
| It's bad for the poor souls who bought after that event.
| underlipton wrote:
| It's just returning to relative sanity. Go look at a 6-month
| chart. Of course, it's mostly risen with the SP500 tide. The mid-
| September jump was some sort of mechanical move caused by things
| deep in the market (and outside it) that you're not allowed to
| know about. Someone needed collateral.
|
| I don't think Oracle's stock price has anything to do with AI.
| That's just the public narrative.
| tru3_power wrote:
| Can you elaborate on the mechanical point you mentioned? And by
| someone needed collateral, does that mean whoever it was bought
| ORCL at that time to hold as collateral? How do you even figure
| that out?
| underlipton wrote:
| >Can you elaborate on the mechanical point you mentioned?
|
| Not really, because I don't really understand the specifics
| myself. I guess it's a situation where you either believe the
| conspiracy theories or you don't. I've still yet to have
| someone explain how a company like Oracle could jump 40% in a
| day and it not be either Dot Com Bust-level speculation, or
| else someone holding Oracle needing the company to be at a
| certain valuation. Things happened the day before the jump,
| and a week after it, Oracle was signing a deal to integrate
| with TikTok.
| theoldgreybeard wrote:
| I can't wait for the apocalyptic razing that's coming.
| refulgentis wrote:
| Very unlikely (are you a greybeard? you should know this,
| unless we're at some sort of resentment > rational local
| minima)
| theoldgreybeard wrote:
| sam altman just needs another trillion dollars and then we'll
| finally have AGI and then the robots will do all the work and
| everyone will get a million dollars per year in UBI and
| everything will be perfect
|
| promise
| refulgentis wrote:
| If you're a greybeard, you would have lived this with many,
| many, companies, and I extremely doubt you'd be so fixated
| and angry as to mumble through a parody of what you
| perceive the counterargument as.
|
| Mine were Uber/Tesla, fwiw.
| theoldgreybeard wrote:
| I'm not angry, I'm having a great time.
| zer0tonin wrote:
| If you were an actual "greybeard" your references would
| be Pets.com and Worldcom. Those didn't end the same way
| as Uber/Tesla.
| chasd00 wrote:
| to be fair, Worldcom ended in an accounting scandal. I
| had a friend who worked at UUNET and would sneak me into
| the megahub in Richardson TX at night to download movies
| and other large, for the time, files (first time i ever
| saw an OC148 in real life). UUNET was bought by Worldcom
| and then after the implosion my friend showed me these
| gigantic cube farms in the office that were completely
| empty of people. It was very weird.
| anoncareer0212 wrote:
| Right, and Pets.com isn't OpenAI. It's frustrated
| trolling dressed up in "greybeard" clothes.
| firstbabylonian wrote:
| If you are like me and can't read this article on iOS, try using
| Praxis News
|
| it's free and cracks most paywalls
|
| https://apps.apple.com/app/praxis/id1598706451
| cinntaile wrote:
| Don't be dishonest... It's your app.
| akd wrote:
| The "Wall Street tech sell-off" is QQQM being down 1.7% over the
| last five days and up 17.4% over the last six months
| daveguy wrote:
| It just started.
| ashdksnndck wrote:
| Tons of money to be made if you're confident.
| calflegal wrote:
| *Confident _and_ correct
| NoOn3 wrote:
| There is always be random in such things. :|
| LunaSea wrote:
| Oracle: -24% in one month
|
| Core Scientific (CoreWeave): -19% in one month
| Elizer0x0309 wrote:
| I still believe in AI and I believe many of these companies are
| going to be staples of this new era.
|
| That said, I hope Oracle doesn't survive this transition. We need
| higher moral companies to usher in the AI era.
| kjreact wrote:
| Companies with high morality, do those even exist? Which one of
| the big tech companies do you expect to work towards benefiting
| humanity instead of focusing on turning a profit by any means?
| ojbyrne wrote:
| Definitely true, but Oracle is the worst, has been for
| decades.
| duxup wrote:
| Big companies? I don't know.
|
| I know plenty of small tech companies that really do care
| about their customers top to bottom.
|
| There's no magic way for anyone to validate that claim
| because if I named them, nobody would know, there's no way to
| really know these things anyway. But they exist.
| brandensilva wrote:
| That's the point of having a government for the people by the
| people.
|
| But when you let billionaires take over that too then the
| people have zero protections from exploitation.
|
| If they cared they would invest in America paying more taxes,
| ensuring citizens are educated and capable of leading their
| companies versus offshoring and even competing with them.
|
| They don't want that and prefer their monopolies instead.
| surgical_fire wrote:
| > We need higher moral
|
| Like Google? Microsoft? Meta? Amazon? Those staples of
| morality?
|
| Or like companies such as OpenAI that just stole industrial
| amounts of copyright to train their models?
|
| Morality has left this building a long time ago.
| brandensilva wrote:
| I've never been a fan of Oracle to begin with given my love for
| open source but after Larry Ellison is out there preaching
| about a surveillance state America he became a "person I can
| ignore" to a "person a despise".
| insane_dreamer wrote:
| > We need higher moral companies to usher in the AI era
|
| I agree that Oracle scrapes the bottom of the moral barrel.
|
| But OpenAI, post-Altman-coup, is right there at the bottom with
| them.
|
| Not sure that Google, Amazon and Microsoft are that much
| higher.
| zombiwoof wrote:
| If any government bails out AI data centers they should be drawn
| and quartered
| outside1234 wrote:
| It just seems so obvious that all of these companies are going to
| unwind and yet I don't know how to avoid being damaged by this in
| my retirement funds in the S&P 500.
|
| Hopefully all of this happens before Open AI can be flogged to
| the public in an IPO large enough to get into the S&P 500 -- in
| which OpenAI then goes to zero
| eternal_braid wrote:
| A company can't be included in S&P 500 if it doesn't make
| money, no matter what its market capitalization is. See Tesla
| for precedent.
| outside1234 wrote:
| Wow, I never knew this. Well, that is good news, but I would
| also worry that Sam will do something shady to fake a profit
| too.
| chasd00 wrote:
| if it's a corporate 401k you can move it to something very
| conservative and probably protect yourself from the worst of
| it. I've built up a decent college fund for my boys in a
| standard issue vanguard brokerage account and one of their
| SP500 index fund. I'm going to go mostly to cash on Jan1 and
| wait a year and see what happens. I need that money in 2 years
| (my oldest will be starting college then) so I don't have a lot
| of time to recover from a full on crash.
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