00:00First of all, we know Oracle has commented on this, and they're saying they're pushing back.
00:04Tell us, though, what you guys found out, what you found out.
00:07Right. Yeah, Oracle is saying that we have a huge contract with OpenAI.
00:11That's, you know, four and a half gigawatts.
00:13They're on the hook to develop data centers larger than have ever been done and in a shorter time frame.
00:18They're saying that we're going to be able to deliver on our contracts and deliver on our expansions, right?
00:23What we reported today is that it's hard to build data centers.
00:27They're already seeing some delays, right?
00:29And we're seeing this across the industry, that companies that are very good at software are getting involved in this business of standing up big data centers,
00:38but finding that there are some physical issues, right?
00:48So what we're seeing is that the company is on the hook to do some very big things with infrastructure.
00:54And it's, you know, going to be maybe a little tougher than it seemed at first.
00:59So it has nothing to do with demand or changes in demand.
01:02It has all to do with supply and challenges with all the supply that you talked about.
01:07By all metrics today, demand is insatiable, right?
01:10I mean, if you went to OpenAI and said, hey, we have a hundred of the largest data centers and we'll sell them to you right now,
01:17they'll probably sign the paper, right?
01:19So today the demand for AI compute is through the roof.
01:23What a lot of folks on Wall Street are getting a little more anxious about is that in the long term, how much does this stick around?
01:30Yeah.
01:31So let's broaden this conversation out a little bit because you have a big takeout today just crossed for Bloomberg Business Week.
01:37It's written along with Drake Bennett and it dives into a question that Carol and I have really been talking about for, gosh,
01:45I think probably three months at this point.
01:47At least, yeah.
01:48Since that last Oracle earnings report.
01:50You can't forget it.
01:51Yeah, you can't forget that one.
01:53And that's why Oracle has turned into this poster child for whatever some investors are calling could be some sort of bubble with AI.
02:03Why is Oracle in that position?
02:04To put it simply, because they're so levered.
02:07It's all about that.
02:08Oracle is one of the world's great cash creating machines.
02:12It's database software.
02:14It's fueling this room.
02:15It's fueling many corporate rooms.
02:17And Oracle said that, hey, we see this AI moment coming and we're willing to throw all of our cash and then some at becoming the AI infrastructure provider.
02:27Where the jury is still out is, is that a good business to be in?
02:31So, you know, when we talk about AI, the spend, for such a long time, Brody, it was about NVIDIA and their chips.
02:39Where is Oracle exactly?
02:40Like, what is it that they are providing and what they are doing?
02:43Yeah, good question.
02:44So, they buy a ton of NVIDIA chips, rent out some data centers, put the two together, and then sell that capacity to somebody like OpenAI.
02:54And that's making it sound simpler than it is because there's a lot of logistical work that goes in there.
02:58But they're effectively a project manager.
03:01They're the quarterback of getting all this stuff together between the real estate developers, the chip makers, and the customer.
03:07So, why do people want to work with them rather than just do it on their own directly?
03:11Because we do know, right, the hyperscalers, a lot of them are just kind of doing it on their own, right?
03:16Or are they not?
03:17Well, Oracle is effectively trying to become a hyperscaler.
03:20They're trying to become, you know, Microsoft built its own AI and they built the data centers.
03:25Oracle has kind of emerged as a specialty player for AI infra.
03:29They wouldn't put it that way.
03:30They want to serve all types of workloads.
03:32But where is the opportunity right now?
03:33There was a period in September where Oracle shares surged 47% in just a matter of a couple days,
03:41thanks to a robust earnings report, a robust outlook, and then announcing some big deals.
03:46Since then, it's down about 42%.
03:48What was the catalyst that got investors to think differently and then also price these credit default swaps the way they've been priced?
03:55Oracle has been trying to get into the cloud infrastructure game for years and for a long time.
04:00It was, they were kind of made fun of, you know, they weren't taken seriously.
04:04What's changed so much lately is they got this massive booking with OpenAI, $300 billion in commitments.
04:11And so that's when September, we saw the stock go crazy.
04:13But what happened after that is OpenAI went around town and kept signing commitments with everybody else.
04:19And it led investors to say, okay, can they actually pay these bills?
04:23Like, what is a commitment?
04:25What does that mean?
04:26A commitment is...
04:27But that's what investors were questioning.
04:29Well, if OpenAI is committing, making all these commitments, can they actually follow through with these commitments?
04:34Is Oracle going to get the $300 billion or is...
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