Monologue: Is Oracle Screwed?

In this week's Better Offline monologue, Ed Zitron walks you through the world finally realizing that NVIDIA’s $100bn deal with OpenAI was BS, and the very real possibility of Oracle’s collapse. Save $10 off a year of my premium newsletter: https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/gzqwkv54e1 - I’d be so grateful! The $100 Billion Megadeal Between OpenAI and Nvidia Is on Ice https://www.wsj.com/tech/ai/the-100-billion-megadeal-between-openai-and-nvidia-is-on-ice-aa3025e3?st=H2AMjC&reflink=desktopwebshare_permalink https://www.wsj.com/tech/ai/the-100-billion-megadeal-between-openai-and-nvidia-is-on-ice-aa3025e3?st=H2AMjC&reflink=desktopwebshare_permalink Oracle tweet about the deal: https://x.com/Oracle/status/2018368835363942668?s=20 Altman tweet about deal: https://x.com/sama/status/2018451015272694248?s=20 Jensen Huang on Jim Cramer: https://youtu.be/ZVTZc0j4hDY?si=8XdqTM1SGYH3fJwG&t=913 https://youtu.be/ZVTZc0j4hDY?si=8XdqTM1SGYH3fJwG&t=913 (15 minutes in) Hater’s Guide To Oracle: https://www.wheresyoured.at/haters-guide-oracle/ YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/ Discord: chat.wheresyoured.at https://discord.com/invite/QUUQUP9szv Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [email protected] mailto:[email protected] See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This is an iHeart Podcast. Guaranteed Human.

• 0:04Speaker 01

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• 0:36Speaker 02

  Call Zone Media.

• 0:39Ed Zitron?

  Greetings and salutations, traveler. I'm your host, Ed Zitron, and this is your Better Offline Monologue for the week.

• 0:49Ed Zitron?

  What's up, everyone?

• 0:52Ed Zitron?

  Blood is running through the stock market as everybody realizes at once, shit I've been saying since 2024. The generative AI costs too much, loses everybody money, and doesn't have the growth potential to make any of this shit worth it. Yet, this has been a week for the more sophisticated haters, with Oracle stock plummeting on the news that it had to raise another $45 to $55 billion to fund data centers for OpenAI, which timed poorly with a story running that Nvidia was no longer doing its $100 billion investment in OpenAI, something you all know was the case because it was on this podcast months ago and has been multiple times since. To catch you up, last September, Oracle announced a $300 billion,

• 1:33Ed Zitron?

  five-year-long deal to provide compute to OpenAI, powered by 4.5 gigawatts of compute capacity that, at the time and at this time, did not and does not exist. As far as I can tell, only 200 megawatts of Stargate Abilene, a project that's been a work in progress since 2024, appears to be complete, and to my knowledge as well, there's only like 200 megawatts of power out there. They need a lot more than that. That's meant to be a 1.2 gigawatt center. Not great. Now, several other data center projects are allegedly in the works too. Stargate Shackleford, Texas and Wisconsin, Stargate, New Mexico, and theoretically at least Stargate, Michigan, through Blue Owl, who invested in basically every Stargate project and pulled out of Michigan due to financing conditions souring.

• 2:19Ed Zitron?

  Oracle had previously raised $56 billion in bonds and debt with 38 billion of that specifically earmarked for Shackleford in Wisconsin. That debt is payable over four years with two one-year extensions and payments are interest only until construction is complete. One little problem, I'm afraid. According to Jerome Darling at TD Cohen, it's upwards of $42 million a megawatt to build a data center. Completing these data centers is going to cost at least $189 billion for the four and a half gigawatts, and Oracle was and is short by quite some measure. So it sold $25 billion more in bonds and plans to sell another $20 billion of stock in an at-the-money share sale, literally printing new shares and dumping them onto

• 3:02Ed Zitron?

  the market in intervals set by the bankers behind the deal. Mathematicians in the audience have likely run the numbers at this point and worked out that this is only $101 billion, which is less than $189 billion. May seem obvious, but I don't know. The fucking markets don't appear to be able to count. Now, the other problem Oracle has is that the only way it can pay these loans off is if OpenAI is able to pay them, and I need to be clear how difficult that will be. That $300 billion, five-year-long compute deal guarantees that at least one year will be over $80 billion in payments. For some context, the entire revenue of Microsoft's Azure Cloud in 2025 was $75 billion. How does OpenAI pay that?

• 3:45Ed Zitron?

  Especially when Oracle hasn't built the capacity, but they don't have the money. They only allegedly made $13 billion last year and lost $9 billion on top of that. How the hell do they pay this? I don't know, but everyone seems to think they will, or at least they did. Now, Nvidia, of course, went out to say that they would absolutely be investing a lot of money in OpenAI's supposed upcoming round, this $100 billion one, different to this $100 billion deal they were talking about. OpenAI is currently raising $100 billion, allegedly. But Nvidia is only putting $20 billion in, and Jensen went on CNBC with Jim Cramer and had the most bizarre conversation. I'll link to it in the episode notes.

• 4:26Ed Zitron?

  He was just saying, oh, yes, OpenAI is wonderful, cutting over Jim Cramer, as Jim Cramer just sat there going, well, you know, we love you. Deal is the best, the best deal ever, sounding like Sylvester the cat. And Jensen is just cutting over him saying, what, OpenAI is amazing. No drama, no drama at all. And let me tell you something. The reason he's saying no drama is because OpenAI also leaked a thing saying that it, that Sam Altman and OpenAI were unhappy with Nvidia chips. It's all so good. This is, this is the kind of stuff that happens when things are going well. And, well, Oracle saw this and Oracle saw this back and forth and they thought, we need to help. We need to help the markets. So they put out a tweet and I'm just going to read it to you.

• 5:09Ed Zitron?

  The Nvidia OpenAI deal has zero impact on our financial relationship with OpenAI. We remain highly confident in OpenAI's ability to raise funds and meet its commitments. Sadly, Oracle's the Nvidia OpenAI deal has zero impact on our financial relationship. T-shirt appears to have people asking them a lot of questions already answered by the show. Jokes aside, that's the kind of thing that Alex Wilhelm, tech reporter, said it's bank run language. You don't want it, that will always have the opposite effect. Saying, well, it's, I said this on an interview recently, it's like walking into a room saying, I didn't fucking kill anyone. People are gonna, people are probably gonna ask why you need to bring that up at this time. The other part of that statement that got me was, we're highly confident in OpenAI's ability to raise funds.

• 5:55Ed Zitron?

  They're not paying this out of cash flow. So Oracle is just depending their entire existence on OpenAI's ability to raise some venture capitalists. It's all very good. It's all very, very good. And it all times very, very poorly with a TD Cohen analyst letter that suggested Oracle would have to fire upwards of 25,000 people and potentially sell its valuable Cerner healthcare IT infrastructure just to make it through. And again, they paid $28 billion for Cerner and TD Cohen said that would be eight to $10 billion worth of cash flow. Again, nowhere near $189 billion. Look.

• 6:31Ed Zitron?

  Look, I need people to realise that Oracle cannot afford this build out. It's committed to building 10 gigawatts of capacity for OpenAI, meaning that on top of the $189 billion it needs already, Oracle needs another $231 billion just to build those data centres. And on its last earnings, Oracle had a cash flow of negative $13 billion. It's, it's not looking very positive. And yes, Oracle also just bought TikTok, a business that also, but it loses billions and billions of dollars. And yes, Larry Ellison's wealth is almost entirely tied up in Oracle's stock, which is currently hurtling towards hell with a velocity reserve for Thatcher and Reagan. I know you're gonna listen to this and I hear from a lot of you, no matter how many times I say this.

• 7:17Ed Zitron?

  Everyone's like, "Oh, the TikTok deal's not about, it's not about making money. It's about political influence." Wow, you're the first fucking person to tell me that. No one has ever told me that, other than the first 150 fucking people. Not an original thought, and also not a particularly effective one. The algorithm on TikTok is already shitting its pants because Oracle can't stop messing with it. Because they want to do the propaganda thing. And guess how TikTok makes money? Uh, ads. And how does TikTok show ads? Well, they keep you on the app with the algorithm. How do you think this is gonna work? I know it all feels a little ridiculous, but there really is a future in which Oracle collapses. Larry Ellison's stock is entirely tied up in Oracle.

• 7:59Ed Zitron?

  And I just did a story called "The Haters Go to Oracle" in my premium newsletter that goes through this. But this is a company, a company, I'm just keeping it, a company in decline. And they are really looking quite shaky. And even if they weren't in decline, the amount of money they're trying to spend here is genuinely impossible for them to afford. They are going to have to stress the debt markets, the levels they've never seen. And even then, they cannot afford the payments unless OpenAI can pay them more than anyone has ever paid for cloud, ever. Oh no, I'm excited. I'm gonna hold stock. And until we know more, I really only have one question. Is that good?

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• 10:47Speaker 00

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