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So… Oracle
Oracle's the poster child for the market's AI capex concerns, and also for investors' growing impati
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So far I’ve seen no evidence of an AI business model that will general revenue for users. Until users find that revenue they won’t pay sellers like Oracle for pie in the sky. Revenue, not cost savings from layoffs.
“Remember: Oracle doesn’t enjoy the same sort of financial heft and cushion as the other hyper-scalers, all of which boast balance sheets generally viewed as impregnable”
Yep. That’s the crucial issue for ORCL.
Future headline, “Oracle channels false Gods.”
If ORCL is a tradable proxy for Open AI, its action is not a great sign for Open AI’s “$1 trillion IPO” plans.
Space X is reportedly also eyeing a $1TR IPO. 2025 revenue growth is only going to be 10-20%, per Musk’s recent comments. What multiple of sales for 10-20% topline growth? Hopefully 60X or more.
Sush, Spacex is one reason why some investors hold Tesla. Even Musk seemed to acknowledge as much as he mumbled something about giving Tesla shareholder some access to the deal.
On a lighter note, it’s fun reading Elon’s comments about DOGE over the past few days. Well, well, well….
(Without the cinematic follow on of “if it isn’t the smoker. Well well…)
The recent frequency of model updates has me suspecting that these product teams are effectively releasing a new version as soon as they’ve validated it. This equates to no long term product roadmap and the hyper-competitive nature of the provider ecosystem is unsustainable. Eventually one of these firms will put out an unproven model that actually does more harm than good. At which point, we’ll finally start to see a couple of firms establish themselves as the leaders and put everyone else in follower mode. I suspect Open AI, who is acting like they will remain a leader, will not end up in this place.
I remain firm on my belief in AI as a productivity tool, I use it and most people use it to improve productivity. However, I don’t see how AI is going to eliminate jobs wholesale. The new buzzword is “human in the loop AI” and that speaks to the unreliability of this technology. It can’t be trusted to execute work on its own, it needs to be monitored and for work it completes to be validated by a human. That is nowhere near the AGI promises of earlier this year, and certainly doesn’t justify the continued hundreds of billions being invested.