[HN Gopher] Oracle is underwater on its $300B OpenAI deal
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Oracle is underwater on its $300B OpenAI deal
https://archive.ph/Qdf2n
Author : busymom0
Score : 169 points
Date : 2025-11-18 20:29 UTC (2 hours ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| esafak wrote:
| https://archive.is/Qdf2n
| xtoilette wrote:
| Time to short major stocks?
| haberdasher wrote:
| You're 2 weeks late.
| ekjhgkejhgk wrote:
| LOL the drop from 2 weeks ago is about 4%.
| whattheheckheck wrote:
| Let it ride
| supportengineer wrote:
| Diamond hands
| LunaSea wrote:
| -20% in the last month
| nawgz wrote:
| Didn't they pop like 30% at last earnings?
|
| Anyways, one stock in 1 month is irrelevant, look at
| SPY...
| btbuildem wrote:
| Time to put your RRSP / 401k in cash, it's all starting to
| seriously teeter.
| supportengineer wrote:
| Well, bonds should be OK. CDs, Treasuries, etc
| Analemma_ wrote:
| Maybe, but not Oracle. Oracle is friends with the regime: Larry
| Ellison's kid runs TikTok and has promised to use it to push
| more conservative content. They'll get bailed out.
| mmooss wrote:
| > Larry Ellison's kid runs TikTok
|
| Also Paramount, which owns CBS News among other things. And
| they are looking to acquire the parent company of CNN.
| harshalizee wrote:
| Oracle is the one to look out for if/when the bubble bursts. Most
| of the big tech will be fine, albeit hurting for a while. For
| Oracle, this might be existential.
| symfoniq wrote:
| So you're saying there's an upside?
| marcosdumay wrote:
| Maybe the entire purpose of OpenAI was to suck all the
| inflation the US government created on the last decade and
| burn it out in a huge bonfire at the end of its life.
|
| Sam Altman has been playing 6-D chess this entire time, and
| we thought he was just a fraudster.
| ramesh31 wrote:
| >Maybe the entire purpose of OpenAI was to suck all the
| inflation the US government created on the last decade and
| burn it out in a huge bonfire at the end of its life.
|
| This has seriously crossed my mind as well. Like we've
| reached an endgame here where big tech has now found a way
| to _literally_ burn off trillions of dollars into waste
| heat.
| dipsheetpatel wrote:
| >fraudster excuse me sweaty, AGI is actually around the
| corner
| matsz wrote:
| Finally, been waiting for this moment since I've learned about
| Oracle. Would be well-deserved for them. Hope Larry Ellison
| loses his yacht.
| water-data-dude wrote:
| But there would be other consequences too, just consider the
| philanthropic organizations that Larry Ellison supports! Like
| the Ellison Medical Foundation, a non profit whose sole
| purpose is to keep Larry Ellison alive as long as possible!
| kstrauser wrote:
| > to keep Larry Ellison alive
|
| This is called "begging the question". I need some evidence
| that Ellison is not an undead.
| kergonath wrote:
| An undead lawn mower.
| lifestyleguru wrote:
| That dude literally launched medical foundation for his
| personal healthcare.
| hypeatei wrote:
| These people are in the class that never fails. Ellison won't
| lose anything.
| matsz wrote:
| One can dream.
| RobotToaster wrote:
| I'm sure they said the same about Citizen Louis Capet.
| elzbardico wrote:
| That is not enough for me.
|
| I want Mr Ellison working in a Gulag in Siberia.
| jandrese wrote:
| Don't they still sell a database product? As long as they don't
| do the Venture Capital thing and sell off the most promising
| business units there should still be something for the company
| to do after the AI bubble implodes. Certainly there will be a
| lot of layoffs, and maybe even a chapter 13, but I don't think
| they'll stop existing.
| chasil wrote:
| Oracle Database Enterprise Edition retails at $47,500 per CPU
| core (there is a 2-for-1 discount on x86) when licensed this
| way.
|
| There is extreme caution in deploying new Oracle databases,
| more so than SQL Sever.
| raw_anon_1111 wrote:
| To a first approximation, no new company says "after looking
| at all of the alternatives, I think we should choose Oracle!"
|
| Also when was the last time you heard companies migrating to
| Oracle from any DB?
| blibble wrote:
| unfortunately their database continues to print money from
| trapped customers
|
| the "AI" is just an attempt to pump the stock price
|
| OpenAI though can't survive as there's no business at all to
| fall back on
| lifestyleguru wrote:
| Oh god, that'd be finally some good news in this recent brutal
| and sad time period.
| James_K wrote:
| Whoda thought that agreeing to build $300 billion of
| infrastructure for a company with $20 billion revenue and zero
| profit was a bad idea?
| drivebyhooting wrote:
| It's looking like Google may outdo OpenAI.
|
| ChatGPT has brand recognition and adoption, but not the best
| product anymore.
| bhouston wrote:
| > ChatGPT has brand recognition and adoption, but not the best
| product anymore.
|
| Companies with worse products win all the time based on brand
| and adoption. So it isn't clear to me at all that Google can
| win.
| imglorp wrote:
| But what does win mean here? It's commoditized at this point,
| everyone's got options, and it's easy to swap models. This
| means the user share will be spread out among the different
| offerings. There's no winner take all scenario.
| blitzar wrote:
| > Companies with worse products win all the time based on
| brand and adoption.
|
| Like google.
| Bricejm wrote:
| Google also has $100 billion in profit each year from it's core
| business to wait out OpenAI.
| LunaSea wrote:
| And the search engine and crawler actually powering these
| LLMs
| Razengan wrote:
| How is that not a conflict of interest by the way, when
| Google's AI search results prevent the websites it trained
| on from getting clicks?
| what wrote:
| Am I the only one that clicks through to the sources
| cited?
| placatedmayhem wrote:
| I usually do the same, but not always. And I believe
| clicking through is a behavior of a minority of people
| and interactions, judging by the click through rate drops
| sites have seen recently. (On mobile at the moment, so
| apologies for not grabbing a source for the rate drops
| sites.)
| muldvarp wrote:
| In the grand scheme of things? Yes.
| threetonesun wrote:
| How is it different than Google Summaries or AMP or any
| of the other ways Google tried to keep people from
| actually visiting the websites that drive all of their
| traffic.
| abraae wrote:
| Google is also conflicted though.
|
| The more they emulate ChatGPT's clean UI, the more they are
| failing to push ads in people's faces, which is what
| generates that $100B for them.
|
| Their business model fails if their users don't experience a
| confusing crap-fest of ads.
| slumberlust wrote:
| As always, they will keep it clean until they can crank
| that enshitification dial to 11.
| overfeed wrote:
| > Their business model fails if their users don't
| experience a confusing crap-fest of ads.
|
| I bet you OpenAI _will_ implement ads far sooner than
| Google can hypothetically run out of money.
| raw_anon_1111 wrote:
| Google also has GCP where it can monetize its hardware
| investments.
| adzm wrote:
| > the more they are failing to push ads in people's faces
|
| Won't be long until chat AI will include sponsored products
| and services in the output.
| paxys wrote:
| OpenAI isn't burning through tens of billions of dollars
| every year on its free tier for charity. It will dial up
| the advertising knob (and every other knob) to 11 the
| moment the cash starts to runs out.
| LeifCarrotson wrote:
| They don't have to do that today, though. Remember original
| Google? Or original Gmail? Neither had prominent ads for
| the first few years, a couple decades later the ads are
| everywhere.
| rvnx wrote:
| And they also have their own chips (TPUs), no need for Nvidia
| YetAnotherNick wrote:
| If you remove AGI dream from the equation, AI revenues couldn't
| come close everpresent ads on the internet which Google has
| monopoly over, and LLM directly affects Google core business.
|
| Also Google doesn't have great business reputation for sticking
| to their APIs, so they need to be lot better than open model
| always, which it is now but my guess would be it wouldn't be
| for long.
| keiferski wrote:
| Unless I'm missing something, Google doesn't really have the
| "chat journal" aspect that ChatGPT has. It's just a search
| engine.
|
| For me personally this is a major feature.
| esafak wrote:
| What's a chat journal besides a history, which Gemini has?
| spankalee wrote:
| https://gemini.google.com/
| ElectricalUnion wrote:
| NotebookLM?
| lateforwork wrote:
| What is the cost of delivering regular search results vs.
| answering an AI chat question? How do you sell ads through each
| of these channels?
|
| If you consider those angles you'll see that Google does not
| want AI chat to replace Google search any time soon. Google is
| being dragged into this kicking and screaming. They are damned
| if they do, and damned if they don't.
| dist-epoch wrote:
| You can get a $20 OpenAI subscription for some serious usage.
|
| Google has no such thing for Gemini, it's subscriptions are
| brain-dead, expensive bundled with 2 TB of storage and other
| shit that I don't want.
| ohyoutravel wrote:
| Isn't Gemini the same price for the same usage as OpenAI? I
| agree they bundle extra things in there, but you don't have
| to use them. If you just used Gemini for $20 you'd be equally
| situated as OpenAI for $20 on the model front.
| iammjm wrote:
| How is this even rational that companies "invest" billions of
| dollars that they dont even have? capitalism ad2025 is a joke
| marcosdumay wrote:
| > billions of dollars that they dont even have
|
| Companies don't ever "have" things, they are themselves things
| that people have. There isn't a fundamental difference between
| taking a loan smaller than their total capitalization or spend
| some money they have liquid at the bank. It's both taking money
| from the shareholders and spending on something.
|
| That said, yes that investment is stupid and deserves quotes
| around the word. But making risky investments when the company
| is operating in the red isn't stupid at all... it's just that
| this one isn't risky, it's certainly bad.
| Am4TIfIsER0ppos wrote:
| Wait until you discover that the bank doesn't have those
| dollars in your account.
| HWR_14 wrote:
| If you can borrow money at X% and make (X+1)% on that money,
| you do that and invest it. As an individual you can do that by
| buying stocks on margin.
| throwacct wrote:
| so, these companies are playing hot potato and this is oracle
| holding it.
| reactordev wrote:
| I so desperately want to make a snide comment about foreseeing
| the future but the reality is the CapX is so muddied that I'm
| afraid everyone is going to feel it.
| outside1234 wrote:
| Exactly, the really frightening thing is Altman taking OpenAI
| public to get it into the SP500 and it completely falls apart
| then. In that case, we all get to hold the bag.
| drivebyhooting wrote:
| It would be an Adam Neumann moment. There's no way OAI can
| IPO with its current financials.
| LeifCarrotson wrote:
| In more ways than one - I don't know how, but I predict
| that Sam, like Adam, would somehow still walk away a
| billionaire while the company imploded.
| wmf wrote:
| Oracle doesn't own the GPUs themselves and may hold as little
| as 10% of the Stargate bag.
| rwmj wrote:
| Please let it be true.
| TheAlchemist wrote:
| One must love the projections of >50% YOY growth for 5 straight
| years.
|
| Why not continue for the next 5 ? Maybe they will find customers
| on Mars.
|
| This while situation is very strange - there are some big
| companies pouring tens of billions into it (Alphabet, Meta) -
| since they don't have anything better to do with the money
| printers they have, but there are several others whose valuations
| are based on completely unrealistic projections where their
| expected revenues in 5-10 years represent 99% of their current
| 'value'.
| prewett wrote:
| Traditionally one is supposed to return money you don't have
| anything better to do with to shareholders in dividends, but
| that is sadly out of fashion with tech companies.
| brainwad wrote:
| Alphabet at least returns capital via huge buybacks that
| effectively act as dividends, but with more tax efficiency.
| lotsofpulp wrote:
| Why would it be in fashion? If you want the money, then sell
| your shares and don't cause a taxable event for everyone
| else.
| andrenotgiant wrote:
| FT uses "underwater" because the deal was $300 Billion and the
| stock has lost $315 Billion in market cap since the deal. That's
| a bit of a stretch, but the rest of the article is very good.
| almostkindatech wrote:
| FT Alphaville is the (very good) blog-style section of the FT,
| so this point is meant slightly tongue-in-cheek, as Bryce hints
| at himself.
| almostkindatech wrote:
| And as it won't be obvious to everyone here: Alphaville is
| one of the few free parts of FT online. You need to create an
| account to access it, but don't need a paid subscription.
| tacker2000 wrote:
| Yea these market cap discussions are always a bit meaningless
| actually, stocks can be volatile for many reasons... its not
| like they actually lost the delta
| chrisgd wrote:
| The market (over)reacted to the OpenAi announcement sending
| Oracle's share price up and now may be overreacting to Altman's
| interview with an investor pushing their stock price down. And we
| are measuring (what seems like) a non-binding investment against
| market cap which swings everyday.
| lateforwork wrote:
| Oracle has no IP in this deal. All they are doing is unpacking
| Nvidia servers, plugging it in, and keeping them cool. They get
| 15% markup for this.
| 650REDHAIR wrote:
| I mean that doesn't have a $0 cost.
| johannes1234321 wrote:
| It's real upfront cost. They got to build the DCs and put in
| the hardware.
|
| OpenAI's side of those deals are just announcements, which
| may become real. Or not.
| killingtime74 wrote:
| So given depreciation and interest they are negative
| LASR wrote:
| As someone paying some vague attention to market movements, this
| was predictable.
|
| News of a deal and hype was largely responsible for the rise. Now
| that the sentiment is cooling off, it's dropping back to a more
| reasonable level.
| dist-epoch wrote:
| So you shorted Oracle and made money?
| HWR_14 wrote:
| Knowing a stock is overpriced and knowing when it will
| correct precisely enough to profit are very different.
| Karrot_Kream wrote:
| Sure but everyone know when earnings happens. If you think
| something is overpriced and a new balance sheet liability
| will "show" it, shorting around after earnings with
| something simple (a hedged short or a put) isn't that hard.
|
| If not you're just doing the social media thing where you
| say opinions that the peanut gallery is likely to agree
| with and smash the upvote button. I guess it's safer to
| fish for upvotes than money?
| throwaway290 wrote:
| the market will be irrational longer than you are
| solvent;)
| Karrot_Kream wrote:
| And social media will upvote the preferences of the
| community over the truth until the heat death of the
| universe.
|
| This quote is the dumbest thing. There are traders at
| firms that make money from the market every day. Chances
| are you may even benefit from products these traders sell
| to more risk averse people.
|
| It's totally fine to say something like "I'm worried that
| the actual products that the AI boom are producing won't
| generate enough revenue to justify these levels of
| investment." But the silly doomshilling happening
| constantly makes no sense. Perhaps more saliently, if you
| treat the market as a source of economic information, the
| doomshilling seems to offer no new information at all.
| Esophagus4 wrote:
| This is such a poor excuse for not being confident enough
| in your beliefs to put your own skin in the game. It's
| revealed preference vs. stated preference.
|
| But in all likelihood, the people saying "I told you so!"
| never actually knew what they claimed to know.
|
| If you want to know what someone _actually_ believes, don
| 't look at their comments, look at their positions.
| lizknope wrote:
| I see that the stock price jumped high on Sept 10 and is now back
| to where it was the day before.
|
| So what is Oracle spending the $300B on? Did they get any
| percentage ownership of OpenAI? Is it building out the cloud
| hardware data center? Can anyone other than OpenAI use it?
| outside1234 wrote:
| Google is going to nuke OpenAI from orbit within the year, so
| hard to imagine these datacenters will be finished when OpenAI
| implodes.
| Havoc wrote:
| The plan is to charge per core...tensor core
| arisAlexis wrote:
| So this economist is saying that a deal is only good if it raises
| the subjective share price? That is some distorted world view of
| finance that aims to just repeat the ai bubble narrative that is
| popular these days
| raw_anon_1111 wrote:
| How is that "distorted"? The classic evaluation of a stock is
| (yeah I'm simplifying) is the present value of all future
| returns. If a deal doesn't increase expectations of future
| returns, it would seem to be the market showing its lack of
| confidence in the deal
| HardwareLust wrote:
| I am Joe's complete lack of surprise.
| CodeWriter23 wrote:
| I seem to recall Musk saying something about OpenAI being over-
| valued/under-funded earlier this year. Of course he was summarily
| booed off the stage by the startup crowd.
| inglor_cz wrote:
| Musk managed to attract so much negative attention that he is
| going to be booed no matter what.
|
| I happen to agree with him re OpenAI...
| watwut wrote:
| As he should be booed off the stages in any respectable
| society. Regardless of whether he is right or wrong about ai.
| etamponi wrote:
| > I disapprove of what you say, but I will defend to the
| death your right to say it.
|
| This is _actually_ what a respectable society does.
| brazukadev wrote:
| booing is also covered by free speech.
| nikkwong wrote:
| He says a lot of things. Just because some of them end up being
| true by happenstance doesn't make him a prophet.
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