Baggy jeans are back in fashion, South Park is dominating headlines, and there are worries about a technology bubble. This might sound like we have stepped back in time to the late 1990s but hold off panicking about an artificial-intelligence bust just for now.
As soon as Oracle gave the AI trade a boost with its unexpected $455 billion order backlog, the doubts began. A major part of the contracted business appears to be linked to a cloud-computing deal with ChatGPT-developer OpenAI, on the hook for tens of billions in annual spending while still losing money itself.
Add in an IPO frenzy—many for companies that are lossmaking or dependent on the cryptocurrency boom—and there are definite signs of exuberance. The S&P 500 and Nasdaq Composite hit record highs on Wednesday, again driven by the AI trade.
Still, comparisons to the dot-com bubble miss the mark. Some might have doubts about Oracle, but it is hardly alone in its confidence—Google said this week its own cloud-computing business has a $106 billion backlog, while Microsoft struck a deal worth up to $19.4 billion to get more capacity with cloud company Nebius. Those indicate current demand, not hopeful forecasts.
More importantly, the dot-com bubble burst after a series of interest-rate increases from the Federal Reserve, driving up borrowing costs for tech companies that had taken on heavy debt loads to achieve their internet dreams. In contrast, the Fed is likely to resume a rate-cutting cycle this month—with wholesale inflation unexpectedly slowing in August, reducing fears of tariff-driven price increases. With more than $7 trillion sitting in money-market funds facing smaller returns due to lower interest rates, plenty of dollars could be heading into the stock market.
Learning the lessons from the dot-com bubble and watching for tangible signs of AI demand is wise. But just like Labubu dolls have replaced Furbies, the hot toy of the nineties, it’s a mistake
to think history repeats itself exactly.
—Adam Clark
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Move Over Musk, There’s a New Richest Person In Town. For Now.
Oracle’s Chairman Larry Ellison passed Tesla CEO Elon Musk as the world’s richest person when his Oracle stock jumped more than 36%. The company shocked Wall Street with a massive revenue forecast tied to demand for its
cloud-computing infrastructure. It’s long been seen as a high-end software company. Not anymore.
- The rise added $244 billion to Oracle’s market value. Ellison, who owns 1.2 billion shares of Oracle, saw his net worth rise to over $400 billion. That’s above Musk’s net worth of approximately $390 billion. It’s the stock’s
largest one-day percentage gain since 1992, according to Dow Jones Market Data.
- Spending on agentic artificial intelligence is forecast to rise to around $1.3 trillion over the next four years, according to the International Data Corporation. The biggest hyperscalers have committed around $400 billion this year
alone and all of that is going to need cloud-computing space.
- Oracle, Microsoft, Amazon, and Google’s parent Alphabet are the only companies
able to provide that space with scale and flexibility. Oracle’s own five-year forecast for cloud infrastructure revenue assumes a compound annual growth rate of 70%. That would take its 2030 tally to $144 billion.
- Ellison says much of the demand is for inference capacity, which enables companies to generate revenue and monetize their investment in AI training. Ellison sees inference as the bigger market, used for automated robotic factories, autonomous driving, drug design, and legal and sales processes.
What’s Next: Wealth rankings will fluctuate, naturally, but as MarketWatch points out the competition between Ellison and Musk is likely to remain friendly. The two have shared commercial interests in some projects, the report said, and Ellison served on Tesla’s board and helped finance Musk’s purchase of X.
—Angela Palumbo, Martin Baccardax, and Tae Kim
Labor Department Investigates Federal Data Statistics Gathering
The Labor Department is investigating the Bureau of Labor Statistics’ collection and reporting of closely watched economic data, centering on recent announcements by the BLS that it would reduce data collection for
the consumer price index and the producer price index.
- The review will also look into a large downward revision of the BLS’s estimate of monthly payroll growth this week. The Inspector General will be looking into “mitigating strategies” for collecting PPI and CPI data, as well as “collecting and reporting, including
revising, monthly employment data.”
- Last month, President Donald Trump fired Commissioner Erika McEntarfer after the BLS released a weak July jobs report that also sharply revised previous months downward. On Tuesday, BLS said it would cut net payroll gains for the year ending in March by nearly one million.
- The challenges facing federal statistical agencies to produce timely, reliable economic data have been a growing concern. Most economists say the recent revisions have nothing to do with politics. The agencies have faced lower survey response rates and budget shortfalls for more than a decade.
- Trump and his allies haven’t acknowledged the lack of resources in their critiques of the agency. Stephen Miran, chair of the Council of Economic Advisers and Trump’s nominee to the Federal Reserve’s Board of Governors, has said he believes that the BLS data have deteriorated.
What’s Next: Trump has nominated E.J. Antoni, currently chief economist of the conservative think tank The Heritage Foundation, to head the BLS. Senate confirmation could come as soon as October. Until a commissioner is confirmed, Bill Wiatrowski has been serving as acting commissioner.
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