Oracle's $300 Billion AI Bet: Ellison Goes All In on OpenAI's Survival
Larry Ellison just staked Oracle's future on one assumption: OpenAI will keep growing forever. The 81-year-old billionaire signed a $300 billion deal to build the data centers powering ChatGPT — five massive complexes consuming more electricity than Chicago. The market loved it for a month. Then reality hit: expenses ballooning, timelines slipping, and OpenAI now shopping around to Amazon, AMD, and Broadcom. Oracle's stock dropped a third. Traders are buying credit-default swaps — the same instrument used to short the housing bubble.
How a LinkedIn message became a $300B commitment
Spring 2024: OpenAI's infrastructure chief cold-messages Oracle asking for computing power. The startup is desperate, burning through GPUs faster than it can rent them. Oracle had been planning a Texas data center for Elon Musk's xAI — even designed X-shaped buildings — but Musk bailed. Two months later, Ellison was at the White House with Trump announcing "Stargate." The hook: Oracle builds the infrastructure, OpenAI rents it, roughly $300 billion over time. Wall Street went wild. Oracle's market cap shot up $250 billion. For a few hours, Ellison was the world's richest man.
The infrastructure nightmare
To fulfill the contract, Oracle has to build five of the world's largest data centers, consuming 4.5 gigawatts of power. One Texas site costs over $1 billion per year just to run on gas generators because the grid can't handle it. Initial 2027 completion dates have slipped to 2028 — labor shortages, material costs exploding. Microsoft spent $40 million on concrete alone for one Wisconsin facility. Oracle's free cash flow just went negative for the first time since 1992. The company is now deeply in debt, with analyst projections showing $70 billion in free cash flow losses through the decade.
Microsoft walked away. Oracle doubled down.
Microsoft powered ChatGPT on Azure since 2016, but CEO Satya Nadella finally said what others wouldn't: Sam Altman keeps asking us to build dedicated multigigawatt data centers just for him. It makes sense for OpenAI. It doesn't make sense for us. In October 2024, Microsoft gave up even its right of first refusal. Translation: we're not betting the company on this. Oracle is betting the company.
The math doesn't work without perpetual growth
OpenAI is losing billions a year with 800 million users. The deal assumes its revenue keeps doubling or tripling indefinitely. If growth plateaus — if the hype deflates, if users don't pay premium prices — OpenAI won't need all this capacity. And it can walk away after five years. Oracle's leases run 15 years. If OpenAI renegotiates or collapses, Oracle gets stuck with the most expensive, illiquid assets in tech history.
Meanwhile, OpenAI has signed similar deals with Amazon, AMD, Broadcom, CoreWeave. It's talking about building its own data centers. Oracle thought it had a unique partnership. Now it's one of many vendors competing for OpenAI's shrinking budget. An analyst put it bluntly: "As OpenAI's commitments grow, the value of each one goes down."
#Oracle #AI #Ellison #OpenAI #bubble #tech #Stargate
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Oracle's $300 Billion AI Bet: Ellison Goes All In on OpenAI's Survival
Ellison's ninth-decade gamble
The man who called cloud computing "complete gibberish" in 2008 — who missed the biggest tech shift in a generation — now says AI is "bigger than the railroads and the Industrial Revolution." He's restructured Oracle around this bet, replacing CEO Safra Catz with two co-CEOs reporting directly to him. The cloud infrastructure chief, Clay Magouyrk, got a $150 million bigger compensation package than his counterpart — Oracle's priorities couldn't be clearer.
Ellison has always been willing to overpromise (Oracle's first product was called "Oracle 2" to fake a track record) and mix personal interests with company business (his health resorts use enterprise Oracle software; his yacht league gets $10 million/year in Oracle sponsorships). Now he's betting that AI will justify the most expensive infrastructure build in tech history — and that OpenAI, not Microsoft or Google or some future competitor, will be the one paying for it.
The bubble indicator
When Oracle reported earnings in December, expenses were growing far faster than expected. The stock cratered. Credit-default swaps on Oracle spiked — the same bets traders made against Lehman Brothers in 2007. One analyst at D.A. Davidson joked there are three scenarios: Oracle cuts forecasts and salvages some work; OpenAI collapses and the contract disappears; or "OpenAI achieves super-intelligence, spends $1.4 trillion, none of us have to work again, and Oracle is fine."
The joke is the point. The entire AI infrastructure boom is premised on monumental projections — computers curing cancer, eradicating whole job categories, maybe becoming superintelligent. The dates for these breakthroughs keep getting pushed into the future. Or into science fiction. Without them, the logic collapses. And Oracle is now the single biggest bet on that logic holding.
Ellison says he's building the future. Traders say he's building monuments to a hype cycle. The next five years will decide who's right — and whether Oracle survives the answer.
#Oracle #AI #Ellison #OpenAI #bubble #tech #Stargate
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Markets Tread Water Before Jobs Report: Oracle Bleeds, Treasury Yields Stuck
Wall Street is in wait-and-see mode. The S&P 500 wobbled around 6,815 as investors braced for the November jobs report on Tuesday — the first real economic data since the government shutdown scrambled the data calendar. Tech stocks got hammered. Oracle's 17% decline extended into another session. Broadcom was heading for its worst three-day plunge since 2020. Crypto sank 3%. The only certainty: whatever the jobs number shows, traders are betting it will be "good news is bad news" — weak employment might trigger more Fed rate cuts.
The data void and the bets
The government shutdown delayed both the October jobs report and this week's consumer price index reading. That's created a data vacuum that's making traders jittery. A market survey shows expectations are split three ways: 29% bet "risk-on," 36% bet "risk-off," 36% bet it'll be "mixed." Markets are pricing in roughly a 0.7% S&P 500 move in either direction on the payrolls print.
Fed officials are signaling caution. Governor Stephen Miran argues the current policy stance is "unnecessarily restrictive." New York Fed President John Williams called monetary policy "well positioned" but flagged increased employment risks. Traders are already pricing in two Fed cuts next year — more than the Fed's own projections — and building options positions betting on a first-quarter rate cut. Treasury two-year yields edged down on those expectations. The 10-year yield sat at 4.18%, little changed.
The Oracle problem and the broader AI reckoning
Oracle's continued selloff reflects a bigger anxiety: the company's $300 billion AI infrastructure bet is starting to look shaky. JPMorgan Credit analyst Erica Spear expects pressure on Oracle's bonds to persist into 2026 as Wall Street hunts for cracks in the AI narrative. Broadcom's collapse — down nearly 20% in three days — compounds the signal: investors are getting nervous about whether the AI spending boom can actually generate returns.
Meanwhile, iRobot filed for bankruptcy after 35 years of making Roombas, handing control to its Chinese supplier. ServiceNow and Adobe got downgraded as KeyBanc sees AI cutting into their software sales. The AI boom that promised to lift all boats is starting to look like it might hurt more than help.
The optimism trade (for now)
Some strategists remain bullish. Citigroup expects the S&P 500 to hit 7,700 by end of 2026 on the back of robust earnings and continued Fed easing. UBS Global Wealth Management is positioning for a rally in 2026, expecting 7,300 by June and 7,700 by year-end. Michael Saylor's MicroStrategy bought almost $1 billion in Bitcoin for a second straight week, betting the selloff is a buying opportunity.
The week ahead
Jobs report Tuesday. CPI Thursday. Both numbers are affected by shutdown-related data-collection gaps, so investors might treat them cautiously. But as one analyst noted, the lack of real-world economic information during the shutdown means these reports will set the tone for the rates market as year-end holiday mode kicks in. Treasuries are headed for their best year since 2020 if the dovish bet holds. If jobs surprise to the upside, the dollar could pop and the rate-cut timeline shifts.
#Markets #Fed #Jobs #AI #Oracle #Stocks #Treasury
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Wall Street is in wait-and-see mode. The S&P 500 wobbled around 6,815 as investors braced for the November jobs report on Tuesday — the first real economic data since the government shutdown scrambled the data calendar. Tech stocks got hammered. Oracle's 17% decline extended into another session. Broadcom was heading for its worst three-day plunge since 2020. Crypto sank 3%. The only certainty: whatever the jobs number shows, traders are betting it will be "good news is bad news" — weak employment might trigger more Fed rate cuts.
The data void and the bets
The government shutdown delayed both the October jobs report and this week's consumer price index reading. That's created a data vacuum that's making traders jittery. A market survey shows expectations are split three ways: 29% bet "risk-on," 36% bet "risk-off," 36% bet it'll be "mixed." Markets are pricing in roughly a 0.7% S&P 500 move in either direction on the payrolls print.
Fed officials are signaling caution. Governor Stephen Miran argues the current policy stance is "unnecessarily restrictive." New York Fed President John Williams called monetary policy "well positioned" but flagged increased employment risks. Traders are already pricing in two Fed cuts next year — more than the Fed's own projections — and building options positions betting on a first-quarter rate cut. Treasury two-year yields edged down on those expectations. The 10-year yield sat at 4.18%, little changed.
The Oracle problem and the broader AI reckoning
Oracle's continued selloff reflects a bigger anxiety: the company's $300 billion AI infrastructure bet is starting to look shaky. JPMorgan Credit analyst Erica Spear expects pressure on Oracle's bonds to persist into 2026 as Wall Street hunts for cracks in the AI narrative. Broadcom's collapse — down nearly 20% in three days — compounds the signal: investors are getting nervous about whether the AI spending boom can actually generate returns.
Meanwhile, iRobot filed for bankruptcy after 35 years of making Roombas, handing control to its Chinese supplier. ServiceNow and Adobe got downgraded as KeyBanc sees AI cutting into their software sales. The AI boom that promised to lift all boats is starting to look like it might hurt more than help.
The optimism trade (for now)
Some strategists remain bullish. Citigroup expects the S&P 500 to hit 7,700 by end of 2026 on the back of robust earnings and continued Fed easing. UBS Global Wealth Management is positioning for a rally in 2026, expecting 7,300 by June and 7,700 by year-end. Michael Saylor's MicroStrategy bought almost $1 billion in Bitcoin for a second straight week, betting the selloff is a buying opportunity.
The week ahead
Jobs report Tuesday. CPI Thursday. Both numbers are affected by shutdown-related data-collection gaps, so investors might treat them cautiously. But as one analyst noted, the lack of real-world economic information during the shutdown means these reports will set the tone for the rates market as year-end holiday mode kicks in. Treasuries are headed for their best year since 2020 if the dovish bet holds. If jobs surprise to the upside, the dollar could pop and the rate-cut timeline shifts.
#Markets #Fed #Jobs #AI #Oracle #Stocks #Treasury
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📰 TikTok Strikes Deal for New U.S. Entity, Ending Legal Saga
TikTok’s Chinese parent company, ByteDance, has struck a deal with a group of non-Chinese investors—including Oracle, MGX, and Silver Lake—to create a new American TikTok, ending a six-year legal battle that threatened the app’s existence in the U.S..
Who Owns What?
The new U.S. TikTok will be majority-owned by American and non-Chinese investors, with Oracle, MGX, and Silver Lake each holding 15 percent and ByteDance retaining just under 20 percent. The majority of the board will be American, and Adam Presser, TikTok’s former head of operations, will serve as CEO.
Security Concerns and Skepticism
The deal is designed to address U.S. national security concerns about Chinese control, but critics warn it may not fully sever ByteDance’s influence. ByteDance will still license its algorithm to the U.S. entity, raising doubts about whether the arrangement truly ends the “operational relationship” between the two companies.
Who Controls the Content?
Some worry that the new owners, many with ties to President Trump, could shift TikTok’s content moderation and feed algorithms to reflect U.S. government or presidential views.
said Georgetown professor Anupam Chander.
#TikTok #ByteDance #Oracle #Trump #USChina #Tech #NationalSecurity
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TikTok’s Chinese parent company, ByteDance, has struck a deal with a group of non-Chinese investors—including Oracle, MGX, and Silver Lake—to create a new American TikTok, ending a six-year legal battle that threatened the app’s existence in the U.S..
Who Owns What?
The new U.S. TikTok will be majority-owned by American and non-Chinese investors, with Oracle, MGX, and Silver Lake each holding 15 percent and ByteDance retaining just under 20 percent. The majority of the board will be American, and Adam Presser, TikTok’s former head of operations, will serve as CEO.
Security Concerns and Skepticism
The deal is designed to address U.S. national security concerns about Chinese control, but critics warn it may not fully sever ByteDance’s influence. ByteDance will still license its algorithm to the U.S. entity, raising doubts about whether the arrangement truly ends the “operational relationship” between the two companies.
Who Controls the Content?
Some worry that the new owners, many with ties to President Trump, could shift TikTok’s content moderation and feed algorithms to reflect U.S. government or presidential views.
“We may have traded fears of foreign propaganda for the reality of domestic propaganda,”
said Georgetown professor Anupam Chander.
#TikTok #ByteDance #Oracle #Trump #USChina #Tech #NationalSecurity
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