Yesterday was a rough one for the tech crowd. $ORCL (+0,82%) took a proper hit after The Information
(https://www.theinformation.com/briefings/oracles-ai-cloud-business-razor-thin-16-gross-profit-margin-new-data-show) shared some figures showing its shiny new AI business is running on margins of just 14% – and that’s before counting some potential losses on $NVDA (+0,78%) Blackwell chips.
That’s miles away from what everyone expected. The idea that “AI = easy profit” suddenly doesn’t look so bulletproof anymore.
$ORCL (+0,82%) stock dropped around 5%, and the whole cloud/AI sector followed it down. Nasdaq 100 slid roughly half a percent, but some individual names fell much harder – $SNOW (+1,61%)
$ZS (+0,16%)
$ZM (+0,19%)… and yeah, even $BILL (+1,16%) (which I’m holding myself 👀)
What’s behind the noise?
Turns out the costs of running massive AI infrastructure – chips, data centres, energy, staff – are chewing through profits faster than expected.
There’s also this slightly dodgy-sounding “circular funding” triangle going on between $ORCL (+0,82%) - OpenAI - $NVDA (+0,78%) basically money looping around the same players, propping up each other’s revenues.
Feels a bit like déjà vu from the early 2000s, doesn’t it?
About BILL
Funny thing is, $BILL (+1,16%) has also been in the news lately, but for something much healthier. They’ve teamed up with $ORCL (+0,82%)
NetSuite to improve B2B payments processing for US companies.
It’s a smart move, really. While $ORCL (+0,82%) AI margins look shaky, partnerships like this one show they’re still pushing to build value in the more “real-world” parts of the business stuff that actually saves companies time and money.
And for $BILL (+1,16%), it means tapping into $ORCL (+0,82%) huge client base and integrating deeper into enterprise systems proper long-term potential there.
My take. What do you think?
Yesterday’s dip felt more like a wake-up call than a meltdown.
AI’s not dead, but maybe it’s due for a reality check – not every company can print money just by slapping “AI” on the label.
Still holding my $BILL (+1,16%) position. It’s volatile, sure, but I reckon the fundamentals are sound and this partnership could age well once the market calms down a bit.
Was this just a short-term shakeout, or are we starting to see the first cracks in the AI hype cycle?