tomorrows

Yeah Stargate it smelled funny It’s because I did it. This has just been demonstrated by the decision of Oracle and OpenAI, who have decided to stop their expansion plans for the data center that was going to be the flagship of the project. This is not just a setback for the project: it is a turning point in that narrative that we have not stopped seeing and that seemed to defend that investment in AI could be unlimited. It’s not like that. OpenAI no longer trusts Oracle. According to reveal sources close to the project, OpenAI’s plans to expand the alliance with Oracle in its data center in Abilene (Texas) have been canceled. What initially It seemed like a solid partnership. to dominate the AI ​​computing segment has collided head-on with a reality: the sector seems to be growing faster than its foundations. Too slow. On Bloomberg indicate that the decision responds to an inability to scale at the pace that Sam Altman demands. OpenAI requires a compute density and deployment speed that Oracle cannot guarantee in the short term. That has forced OpenAI to look to other partners—including Microsoft—so as not to compromise its roadmap. Technological gap. This brake is a symptom of a potential critical problem for Oracle: the world requires data centers with the latest technology, the most modern chips and modern liquid cooling systems, but Oracle seems to be focused on a very slow update cycle. They are building yesterday’s data centers with tomorrow’s debt: although the infrastructures they are built were valid under previous standards, they are obsolete for the next generation of large language models (LLMs). The accounts do not come out. And as we said, the other problem with Oracle is that all these projects are financed with very high leverage and economic risk. Larry Ellison’s Company is jeopardizing future cash flows to create data centers that are “old” when they come into action. If AI revenues don’t materialize, Oracle will find itself in a dangerous position. Bubble. All of this contributes once again to AI bubble debate. No one seems to deny that this bubble exists, but this slowdown raises more and more doubts about excess investment in the sector. That OpenAI is now making this decision is a bad sign, and reinforces the theory that investment in AI has been absolutely overblown. This year alone, several AI giants have indicated that they will dedicate a capex of 650,000 million for data centers. The challenge of not being a Big Tech. OpenAI has a fundamental problem: it is trying to play with the elders. Google, Amazon and Microsoft already had gigantic cloud infrastructures, but also a financial situation that allowed them to consider their strategy in a different way. While OpenAI has not stopped signing agreements in which the figures involved are astonishing. OpenAI follows burning moneybut not only his: also that of others. The danger of the domino effect. That OpenAI has hit the brakes with Oracle can be dangerously contagious. If one of the leading companies in the sector takes a step back from its alliance with a key supplier, other clients could begin to think twice before reaching similar agreements. In Xataka | OpenAI says its deal with the Pentagon is secure. Seriously, really, you have to believe it, trust it, it assures you