This week Microsoft stock tanked -12% on revelations that 45% of its Azure customer backlog is OpenAI.
Oracle is now struggling to get loans to pay for its data center buildout to meet its $300B deal with OpenAI. They may need layoffs to come up with the money.
The underlying theme being bankers don’t believe OpenAI will have the money to pay these bills and it’s pulling down companies doing business with it.
@hedders
Thank you! And Azure is Microsoft's server space rental service, "cloud computing".
So I take it that Microsoft is building an ass-tonne of expensive rental widgets, but it's widely known that about half of the apparent demand for rental widgets is actually just empty promises from someone with no money.
Maybe I shouldn't buy Microsoft stock then. Either, I mean.
Oracle and OpenAI are both a mess, and debt holders are starting to turn on them.
Interview with Ed Zitron on the AI bubble.
He covers all the claims contrasted with the reality of the current state of AI.
We thought AI would kill us all:
Turned out AI hallucinates you are dead if you ask about yourself.
We thought AI would be better at our job and replace us:
Turned out AI is worse at your job but your boss didn't realise, tried to replace you then desperately tries to hire you back.
We thought AI job apocalypse in tech would come because it's good at coding:
Turned out the job apocalypse is there, but because AI is so expensive for zero return, banks are stopping lending.
Left unsaid in the article is that if a company is selling off or divesting itself of crucial assets in order to pay its present debts, such as in this case firing the workforce it needs to recover from those debts and rebuild its market base, then that company is on its way out.
Oracle is proper fucked, and they did it to themselves.
It's true that it's a bad setup for the future. But Oracle is so huge, that even making a really bad decision is often just the first domino in a 10 year slide. Oracle sells and makes too many essential things for them to be wound down chaotically.
Plus, Ellison is 81, he's older than Trump. If his company takes a 10 year slide, he's probably dead before it has any material impact on his life.
Don't get me wrong, I would be happy to see Oracle crushed. I really dislike them. But it's going to be a long road.
@carnage4life there we go, I guess.
The us stock market being wiped out is the only reasonable outcome from here, don't you think?
I was surprised it lasted this long, so I guess I'm missing some tricks being used to prop it up.
Btw, EU pension fund already starting to sell us bonds, and the $ is going down too, so it's not going to be contained to wall st.
Perfect storm...The 2008 crash got nothing on this one, if you ask me.
I think a general US market + economy crash has been in the works for a long time. I've been telling my friends for years that we were not going to make it out of the 2020s without something major happening. Like, 1929 major.
AI + Financial Engineering + Trump management is probably going to tip it over the edge. It won't necessarily look like the 1929 crash because the finances are just more complex, but I think it's going to feel like that crash for a lot of people. Sadly.
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