Thanks for reading The Briefing, our nightly column where we break down the day’s news. If you like what you see, I encourage you to subscribe to our reporting here.
Greetings!
Years from now, today may be remembered as the moment of peak euphoria for artificial intelligence. Not only did Oracle’s stock jump 36%—thanks to the company’s stunningly optimistic forecast for AI-related cloud revenue growth—but the enthusiasm spread to a range of companies that may not get the same boost from AI.
I’ll be quick with the caveats, because predictions like this are almost always wrong. AI is being adopted at a mind-blowing speed and investors were surprised that Oracle, a data center laggard, could put up such crazy numbers in its forecasts looking out five years. There are other reasons for investor optimism, including coming interest rate cuts, another big AI chip order for Broadcom and Microsoft signing a multibillion dollar deal for AI infrastructure with Nebius.
Today’s stock moves, though, defy logic. Oracle added nearly $250 billion in market capitalization today, becoming a company worth $922 billion. Larry Ellison’s cut of the increase was about $89 billion—his stake in Oracle is now worth nearly $400 billion. Ellison’s son David could have bought 11 Paramounts with the gain, or much of the rest of the media industry.
The rally was sparked by Oracle on Tuesday night reporting a 359% increase in future contract revenue in its most recent quarter, an increase worth $317 billion. That was based on contracts signed in the August quarter with three customers, one of which was thought to be OpenAI. On Wednesday, The Wall Street Journal confirmed that speculation, reporting that OpenAI had committed to buying $300 billion in computing power from Oracle over the next five years.
There are no guarantees, of course: While OpenAI has been able to raise a staggering amount of money, its ability to pay for that computing power depends on it raising even more.
The Oracle boost spread to other companies involved in data centers, including energy companies like GE Vernova, Vistra and Constellation Energy plus data center developers Digital Realty Trust and chipmaker Broadcom. The same caveat applies to them, as still more money will have to be raised to fund their growth and justify their valuations. Shares of GE Vernova, which makes gas turbines among other things, have doubled since President Donald Trump’s “Liberation Day” in April.
Today can be the day of maximum froth even if AI is the greatest new technology in history. What matters is whether the companies’ earnings from AI meet investor expectations. You don’t have to go back to previous bubbles to find examples: Tesla shares are down by a quarter this year.
The issue here is that OpenAI will need to raise tens of billions of dollars each year to pay Oracle for the computing power in its data centers. My colleague Sri Muppidireported last week that OpenAI increased the amount of cash it expected to burn through 2029 by about $80 billion to $115 billion. Meanwhile, Oracle will need to raise cash to build that infrastructure, before OpenAI pays the bill.
There’s froth in the market for initial public offerings as well, a phrase that would have sounded unbelievable a few months ago. Buy now, pay later lender Klarna priced above its expected range and then its shares jumped 20% today when it started trading.
Worry not about escaping from the craziness. New Yorkers will soon be able to use their Uber app to book an electric flying taxi out of the city. Electric air taxi maker Joby Aviation, which my colleague Steve LeVine wrote about here and here, said today that Uber flights will start next year. Joby, which recently acquired aviation company Blade, and will fly passengers at 200 miles per hour to local airports and beyond. Keep that in mind if today really was the moment of peak euphoria.
Europe’s Tech White Knight
Italian tech conglomerate Bending Spoons sure likes to swallow up declining U.S. tech firms. Its latest deal, announced Wednesday, was the $1.38 billion purchase of Vimeo, a firm which sells video creation tools—a business that faces a serious threat from the rise of AI-powered video services. (For more on Vimeo, see this story).
Vimeo stock has been in the toilet for years, but Bending Spoons is coming to the rescue, paying almost double what the stock has traded for the past few months. In fact, the premium—91% above Vimeo’s 60-day average share price—is pretty much the same as what Bending Spoons paid in its purchase of Brightcove, another publicly traded U.S. video tech firm that the Italian firm bought in February for $233 million in cash.
Both businesses were very slowly shrinking: Vimeo’s revenue fell 0.7% in the first half of this year. Brightcove’s revenue fell 0.9% in the first nine months of last year, its last reported before the deal.
Bending Spoons in 2023 also bought Evernote, a once-hot productivity software firm, which got overtaken by bigger rivals. It’s not clear what Bending Spoons’ overall acquisition strategy is, although there are plenty of other stagnant tech companies it could snap up if that’s what draws its interest.—Martin Peers
In Other News
• Nebius Group said it plans to raise $2 billion in convertible notes and $1 billion in equity days after it signed a contract to provide Microsoft with access to Nvidia chips.
• Tesla CEO Elon Musk says Tesla is “struggling” to finalize the design of its Optimus humanoid robots, primarily due to difficulties perfecting the model’s hands. More here.
• A group of web publishers — including Reddit, People Inc., Medium and Quora – are backing a new open-source standard that aims to let the crawlers from AI firms better compensate publishers.
• Netflix struck a deal allowing advertisers to buy Netflix’s ad space through Amazon’s advertising technology platform.
• Shopify chief operating officer Kaz Nejatian is departing the company, the e-commerce software company said in a securities filing Wednesday.
• Amazon’s autonomous ride-hailing company Zoox said Wednesday it has started to accept rides from members of the public for stops along the casino-lined Las Vegas Strip. Riders can call for a Zoox pick-up on the new Zoox smartphone app.
Today on The Information’s TITV
Check out today's episode of TITV in which we ask the CEO of Atlassian to explain the decision to buy The Browser Company and about the corporate data wars.
Recommended Newsletter
Dealmaker was named the “Best in Business” newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here.
Reserve your spot for The Information’s WTF 2025 Summit. With AI reshaping business, volatile markets, and rising political uncertainty, the boldest women are coming together to lead through change.
