Banks have started discounting loans for AI data centers. At Oracle’s campus in New Mexico, the syndicate loaned out about $18 billion near the end of last year, and now secondary-market quotes are only around nine tenths of a yuan. Lead arrangers like Santander, Jefferies, and others are pushing the prices further down.
Oracle’s own accounting is even more worth scrutinizing. Next year, capital expenditures could be as high as $95 billion, while the most it can recoup from customers is at most $25 billion. With such a gap in the middle, who is supposed to fill it—I’ve thought about it for a long time and still can’t figure out where the profits are supposed to come from. The stock price has also been weaker than the entire AI sector lately.
This campus is a project co-built by Oracle and OpenAI, and it sits under that infrastructure plan called the Stargate program. OpenAI’s free cash flow over the next few years is expected to remain negative, and the Fed has just raised interest rates. Banks that finance upgrades to AI machine rooms can’t carry it anymore for now.
Oracle’s own accounting is even more worth scrutinizing. Next year, capital expenditures could be as high as $95 billion, while the most it can recoup from customers is at most $25 billion. With such a gap in the middle, who is supposed to fill it—I’ve thought about it for a long time and still can’t figure out where the profits are supposed to come from. The stock price has also been weaker than the entire AI sector lately.
This campus is a project co-built by Oracle and OpenAI, and it sits under that infrastructure plan called the Stargate program. OpenAI’s free cash flow over the next few years is expected to remain negative, and the Fed has just raised interest rates. Banks that finance upgrades to AI machine rooms can’t carry it anymore for now.