> All Oracle is doing is unpacking Nvidia servers and plugging them in.

1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom.

2. Nvidia servers are at the moment even less commodity than typical cloud servers and are currently THE hottest hardware resource in the world. Everyone is scrambling desperately to procure them, and the US and China are battling geopolitically over access to these things, and they are actively being smuggled to bypass these restrictions.

> However, since then the AI hype has evaporated, and hyperscalers are no longer being rewarded with a higher stock price.

This is a misreading of what has been happening with hyperscaler stock prices. They have consistently been punished despite record estimate-beating earnings pretty much every quarter for the past multiple quarters, precisely because they keep incinerating all that money and more on the same CapEx that Oracle is.

At this point it is pretty clear that the biggest moat in the whole AI boom is access to compute, for which the demand has just kept exploding. (See: Anthropic paying its competitors through its nose to keep Claude up.)

I've little love for Oracle, so I fear they will actually make out like bandits with these moves.

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syrrim 20 hours ago | parent [-]

> 1. Any cloud business essentially is "unpacking servers and plugging them in." Yet the cloud business has been exploding quarter-over-quarter ever since AWS came online. To the tune of double-digit billions cash flow every quarter for each of the hyperscalers, even before the AI boom.

No, major cloud providers are mainly a software business. They provide unique manage cloud offerings, which provides value add over raw hardware as well as lock in. People on AWS cannot just move to GCP, let alone DO. Hence amazon can charge a substantial premium over the price of the hardware, which is why they make so much money. If all you are doing is plugging in GPUs, you don't provide that value add and are going to have very slim profits.

	▲	keeda 7 hours ago \| parent [-]
		1. Cloud providers significantly markup bare metal and VMs even without managed services (lookup the numbers.) Managed services are the lock-in Trojan Horse clouds love to push but not everyone falls for them. Customers are OK paying for the fat margins not because of the managed services, but because of the elasticity, convenience and reduction in SRE headcount. 2. Why can’t cloud providers do the same thing with GPUs that they do with other servers? Are GPUs somehow not amenable to managed cloud offerings wrapping them? 3. Literally just having any access to GPUs (or heck, even memory) itself is the value add today. Maybe when we have supply to match the demand things will change, but that seems to be a ways away and points 1 and 2 above will still be in play anyways.