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Margin For Error
I guess I have to mention Oracle.
Right? I mean, you can't harp on potential AI profitability disap
Either Fox Business or CNBC said sources (yeah I know, sources) claim the Oracle report is “off base and doesn’t reflect actual financials of that area of business” Oracle has some events next week, so stay tuned…
I also suspect some early margin compression due to upfront costs in racks, networking, power, labor etc
Loved that SNL skit, thanks for the walk down memory lane!
One of my all time favorite SNL skits…
This strikes me as a blow to the risk/reward calculus for AI focused investments. How many big players in this country alone are chasing AGI and how many winners can the technology abide. It’s not exactly apples to apples, but how many search engines hit the big time. There are a lot of chips on the table in a game where nobody wants to be, or can afford to be, the loser. The cashiers window is starting to look very tempting to me.
Phil Hartman was one of the greatest cast members. What a tragedy that he was taken so early in life.
I read some recap of the dot-com boom years a few months ago, I don’t remember the source, but talked about how initial boom companies were building the infrastructure (Cisco, ISP’s) but then the second wave were companies that monetized that infrastructure (Amazon, Facebook). So it certainly feels like a rhyme when we’re watching the inflation of AI infrastructure companies. Certainly many will ride that boom, but the long term wave is yet to develop (and probably after a loud pop of the first bubble).
Change bank is great, I still quote “the answer is simple: volume”. Not that I saw it when it aired, but family had the episode on VHS.
I’ve been following with keen interest the circular money flows between Nvidia investing in OpenAI, OpenAI buying (or renting) capacity from Oracle, and Oracle buying Nvidia chips. All stocks go up, but no new money actually comes in. It’s reminiscent of the S&L crisis, where institutions sold real estate to each other to inflate each other’s balance sheets. Using Oracle’s historical margin rates, these recent AI deals gave us one picture. With actual margins for Oracle truly much lower, this blows a big hole in ORCL’s perceived value as a result of the investment. If it looks like a bubble and quacks like a bubble…