Oracle expects investors to pump $50 billion into its cloud this year alone

Oracle has revealed it needs to raise $45 billion to $50 billion in cash to fund expansion of its cloud infrastructure, and its plan to raise that money Big Red on Sunday issued an announcement that explains it is raising money “to build additional capacity to meet the contracted demand from our largest Oracle Cloud …

[David Newall]

Beware the licensee terms

They'll probably have the most intricate and comprehensive suite of ai products, a cornucopia of do all and be all for everybody, priced from a pittance for entry-level to a king's ransom for it all.

Most people will pay for entry-level, never knowing that Oracle delivered everything. They'll naively ask the ai the wrong questions using the wrong phrasing, thus trespassing into advanced product territory, and then licence enforcement will pounce, audit usage, discover the usage that was not paid for, and demand the licensee pay for the top level product for every possible seat to avoid prosecution.

Every possible seat will include all employees, from janitorial to the board and all in between. It will include a seat for every customer of the licensee. And for every visitor. That will be how they make the real money.

[EricM]

Re: Beware the licensee terms

Agree.

On the other hand, these days even simple 7B chat bots make you aware that using Oracle software means navigating a legal minefield and tell you to be very cautious and to make sure you follow every single limitation and every small detail in Oracle's byzantine licensing terms.

So, if that really is their overall plan, Oracle AI is probably toast.

[chuckufarley]

Meh...

...Oracle has yet to honor it's obligations to the license agreement of Open Solaris. That alone would barely cost them a thing. So why should World+Dog trust them to pay bonds?

[A Non e-mouse]

Couldn't Larry just sell one of his yachts?

[EricM]

:)

If one thinks about what money selling a luxury yacht would bring in (a few dozen to hundred millions) the enormous volume and risk of those AI investments becomes more clear ...

[Anonymous Coward]

Timing

Oracle is starting to ramp up cloud infrastructure just as Europe is starting to turn away from American cloud providers. Great timing guys!

[Anonymous Coward]

Re: Timing

Don't worry, the British government's purse is always open to help line the pockets of US corporations.

[geek1325]

Oracle's strategic moves under pressure

Tick, tick, tick ...

A huge time-bomb is looming on Oracle's horizon, as it goes all-in on a weak AI/cloud poker hand. A 50% drop in its stock price is a clue, people.

I'd rather bet on Google, Microsoft and Anthropic.

Apple has already lost the battle, and Meta just wants to find ways to sell even more ads to clueless people.

[EricM]

Re: Oracle's strategic moves under pressure

>>> I'd rather bet on Google, Microsoft and Anthropic.

And I'd also bet A) on the tech community's increasing understanding that even sophisticated, large AI models have pretty noticeable, albeit more subtle limitations as well as B) smaller, more optimized AI-runtimes and more focused models, that can be hosted locally, some even without mandatory accelerating hardware, will eat the lunch the the cloud-hosted mega-models of 2025.

Both types of runtime deliver far-from-perfect results, but local CPU-based hosting is becoming the option that is several magnitudes cheaper - fast.

[JacobZ]

Big Tech is delusional, Oracle most of all

Big Tech doesn't want to believe that anything but massive cloud-based LLMs can get the job done, regardless of reality. The promise of Big LLMs is that only a handful of companies have the money and scale to deliver them, and that those companies will make massive profits. And that is so seductive to tech CEOs it has completely clouded their judgement.

What's that Upton Sinclair quote? "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." Now substitute "image of himself as a visionary leader transforming the world and also becoming as rich as Croesus" for "salary" and you get some idea of why tech CEOs collectively have lost their minds.

[cd]

Re: Oracle's strategic moves under pressure

Mainframe vs PC redux...

[chuckufarley]

Re: Oracle's strategic moves under pressure

Fast crap isn't any better than slow crap. Just saying.

[_wojtek]

"stock"

using stock and debt to finance stuff has to be the most convoluted way of fucking up everyone (especially broader society) by all those "big corporations"...

[Anonymous Coward]

Re: "stock" - the AI-bot oracle respons:

. It highlights something often missed in surface‑level reporting: Oracle isn’t just “investing in growth,” it’s racing to compensate for years of under‑investment while its traditional software margins shrink. The tension between massive capital needs and investor‑friendly cost cutting creates a structural imbalance that can’t be solved through layoffs or tighter contracts alone.

What stands out most is the long‑term trust risk. As Oracle leans harder on aggressive licensing, upfront payments, and TikTok‑style control dynamics, enterprise customers inevitably start seeing it less as a partner and more as a dependency to manage. That shift doesn’t show up on a balance sheet right away — but once it starts, it’s incredibly hard to reverse.

[JacobZ]

Fantasy money

That $455B that Oracle claims it has booked is entirely imaginary. $300B of it is from OpenAI, which does not have the money. It doesn't even have $30B. It is burning cash so fast that it will have to borrow more than any company in history has ever borrowed to pay any of what it has promised.

But it gets worse. A lot of the remaining book is companies like NVidia and others buying capacity *on behalf of OpenAI*, which they will then lease to OpenAI -- which can't pay them either.

And worse again: Oracle does not get paid on (most of) these contracts - if it gets paid at all - until the datacenters are up and running, at which point it will be hundreds of billions in the hole.

The best thing that can happen to Oracle is that OpenAI fails quickly, before Oracle spends a lot more on datacenters it is never getting paid for.

[A Non e-mouse]

Re: Fantasy money

I've got someone from a company called "Enron" on the phone. They're asking for their business play book back.

[Irongut]

Lesure Suit Larry and the Wonky Cloud

The cloud that can't even keep a single app running? (Tik Tok)

Why would anyone invest in that?

[Alan Mackenzie]

What's a mandatory convertible preferred security?

I think in a forum for IT people, it would be good to explain such obtrusive financial jargon (whereas it may be patronising to explain this on a financial forum).

What is mandatory about these securities? Into what can they be converted? Who prefers them? And in what sense are they secure?

Or, in short, what effect will they have on Oracle's owners and investors? My inexpert view is that borrowing a year's revenue for an insolvent customer that likely will never be able to pay is foolhardy.

[David Hicklin]

Re: What's a mandatory convertible preferred security?

> My inexpert view is that borrowing a year's revenue for an insolvent customer that likely will never be able to pay is foolhardy.

Agree, sounds very much like Sub-Prime Mortgages, and we know what happened here.

[Groo The Wanderer - A Canuck]

Forecasting is easy compared to collecting fees from companies who are going bankrupt from their excessive "AI" investments not paying off. That's going to start in a few months when this rather obvious bubble starts to pop.

[Tron]

Is Oracle on the wrong side of the fence?

When the bubble pops, the AI companies and external investors will get wiped out. The big tech companies will have enough in the bank and will buy up the wreckage - IP, data centres etc - for peanuts.

Overstretched tech companies could be vulnerable alongside the external investors and AI companies.

Incidentally, one of the differences between SaaS and standalone software, is that SaaS may vanish if the company running it goes under. With standalone software, you might just lose support/updates. So if you use SaaS, you might want to check whether the vendor went 'all in' on AI.