Larry Ellison’s software company falls more than rivals over its borrowing and reliance on OpenAI contracts
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Its worse for some other "ai" related companies.
Coreweave for instance, now has its CDS trade around 600bp, which is a 1/3 rise in 2 months, which implies that the probability of a default in 5 years is 40% at a 40 cent recovery rate.
That makes Coreweave's credit rating the equivalent of CCC-, which aint good.
Yeah, and then the Canadian government handed hundreds of millions to the kids at Cohere who have now gone spent it on Coreweave. When it was all announced I was very very vocal that using an inexperienced startup for the sovereign compute capabilities seemed a very poor choice. I'm so curious to see how this all plays out.
By reactordev 2025-11-1416:291 reply I think we know how it plays out. In a couple of years, someone is going to have to swoop in and save CoreWeave’s customers and consultants will be lined up for that “transformation”.
By hackernewds 2025-11-1417:161 reply are you suggesting bailouts for the AI data centers are the new too big to fail
Coreweave can default and be liquidated and the data centers will keep running just fine.
By MangoToupe 2025-11-153:331 reply I don't think anyone is worried about the data centers but rather that the pretense of demand for them was fabricated to begin with.
Of course, we can always find ways to use compute in non-productive ways—mining crypto, for instance.
By lokar 2025-11-1515:45 Demand is at least partly a function of price.
By unyttigfjelltol 2025-11-1419:522 reply But imagine all the data, tech and data center companies simultaneously go into receivership. Farfetched, but indulge the fantasy.
At that moment what choice would the government have but to conduct a rescue that at least keeps the lights on, and probably more? What’s the alternative? Extensive data losses, business interruptions— if just a couple of those key companies spontaneously stopped operating, chaos.
By lokar 2025-11-1420:05 If the companies run cash flow positive absent debt service (I assume this is the case), the creditors will be in charge, they can put up more $, or get a loan while they re-structure the company. Either they end up owning it, or they sell it. This can happen to a bunch of companies at the same time.
There would not really be a huge rush if they are cashflow positive, they can take their time.
Private equity: Y'all got some of that excess data center capacity for cheap?
Source, we basically explored this at my previous job, and that was 7 years back.
By reactordev 2025-11-1421:14 Curious what your 10 year projection is…
> When it was all announced I was very very vocal that using an inexperienced startup for the sovereign compute capabilities seemed a very poor choice.
Cohere raised from Nvidia. Cohere spends on Coreweave. Coreweave raised from Nvidia and buys Nvidia chips.
This is why they buy from Coreweave.
You're not implying there is corruption in the form of circular deal making in the AI/Tech industry, are you?
No, it's not "corruption". It's that very little real money changes hands. The smaller investors and debt providers get sucked into funding it but that's about it.
You get GPU rentals. Not the actual billions raised they claim. So it's just creative accounting to count the same money 2-4x.
Hah. Well, back in ~2004 we had a different name for "creative accounting" to generate "revenue" while very little money chnages hands. Back then we called it fraud. But I guess terminology changes.
This kind of circular deals are very common and doesn't violate any laws. It's the magnitude and prevalence of it in the AI sector that flashes a warning sign.
By oblio 2025-11-168:07 A lot of stuff doesn't violate any laws until it does. Laws are created after the crimes have already happened. That's why we have the letter of law vs the spirit of the law.
What should they have done instead?
I have a lot of opinions on this but curious about yours :)
I'm Canadian and I built DigitalOcean, there is a data center in Toronto because I decided. I am one of many Canadians who have built scaled infrastructure and think this is a nightmare. Many competent people at telus and bell behind the scenes believe it or not. They should have, and still should, form a crown corp and get a bunch of us older infrastructure people to help put it together. We have crown corps for this very purpose, from my understanding the people in the rooms calling the shots had little to no experience architecting large scale physical data center build outs. Cohere, or any startups should be stakeholders, but the infra should have been home grown.
I'm not opposed to CrownCorps and regulated energy markets. The most recent rumblings in the US clamor for govt. infra stepin to compete with China on power/permitting intervention. Makes sense.
That said, Cohere only got a couple hundred million from CA and the DC is being built "domestic" in CA.
That's not enough?
Sounds like you're knowledgeable about the skills gap of do-ers in CA govt, but I'd be concerned about wasting even more time/$ through incompetence. And a politician would be staked on its outcome. That's too much political risk.
By Scene_Cast2 2025-11-1418:14 I would love to hear your (and others) opinions.
I don't have a good idea of what happened inside or what they could have done differently, but I do remember them going from a world-leading LLM AI lab to selling embeddings to enterprise.
By helloooooooo 2025-11-1416:334 reply Cohere is doing a lot of enterprise AI business, and a lot of business directly with the federal government. They are also not juiced up in these financial games that OpenAI or Oracle are playing.
Additionally, Cohere is no less “kids” than Anthropic or OpenAI. Aidan was literally one of the co-authors of “Attention is all you need”.
No doubt some amazing engineer's work there, but there are little to no adults in the room at that business as far as I can see, and sure they like to tweet about how well they are doing, and I keep hearing this line that they're selling to enterprise, uh, who, Canadian tire? If they actually have more than $150mm in revenue I'd be amazed, and $150mm revenue is still, not at all impressive.
https://www. theinformation.com/articles/openai-challenger- cohere-fell-85-short-early-revenue- forecast
By wbl 2025-11-1417:02 $150 mm with a gross margin of 80% and low capital is great. $150 mm when you spent a few billion not so much.
aidan was an intern on AIAYN
>While an intern at Google Brain, Aidan Gomez co-authored the paper "Attention Is All You Need" with other researchers.
By maximilianburke 2025-11-1418:11 https://en.wikipedia.org/wiki/Attention_Is_All_You_Need#Auth...
>The authors of the paper are: Ashish Vaswani, Noam Shazeer, Niki Parmar, Jakob Uszkoreit, Llion Jones, Aidan Gomez, Łukasz Kaiser, and Illia Polosukhin. All eight authors were "equal contributors" to the paper; the listed order was randomized.
Intern or not, it still sounds like he contributed substantially.
By nmfisher 2025-11-154:27 I took "kids" more to mean they're inexperienced at building sovereign data centres.
By ryandv 2025-11-1417:03 I thought they were still hiring bootcamp graduates.
By JCM9 2025-11-1416:26 Yes, the price of Coreweave default swaps has jumped 53% since October. In the eyes of the bond markets they’re basically toast… a ticking debt bomb waiting to implode.
By SilverElfin 2025-11-1419:263 reply Sorry if this is basic, but do you mind explaining the logic here for those who aren’t familiar? Also where are you getting this data? Thanks in advance.
By chollida1 2025-11-1421:30 Sure, the math isn't that complicated but i'll give the caveat that I don't manage money in this space so its a bit outside my area of expertise.
THe annual premium is approx the premium paid to cover the expected loss, so:
spread = (prob_of_default_annual * (1-recovery_rate)
We have a spread of 0.06 and a recovery_rate of 0.4
so the annual probability of default is about 0.10
Now converting that to 5 year we have
prob_of_default5y = 1 - (1-pd_annual)^5
Which gives about 40%.
And if you look at the cds spreads across various bond ratings you'll see they look like
Rating || 5y CDS Spread || 5 yr default prob
BBB 60-120bps 1-3%
BB 150-250bps 5-15%
B 400-700bps 25-34%
CCC 700-1200bps 35-60%
By quickthrowman 2025-11-1421:07 You can buy insurance on a bond defaulting, it’s called a credit default swap. One party sells a credit default swap and another party buys the credit default swap.
The price of a credit default swap is essentially the probability that the borrower defaults on its bonds (misses an interest payment) which would mean the person who sold the credit default swap would owe money to the holder of the credit default swap.
The price of a credit default swap increasing means the market is pricing in a higher probability of Coreweave defaulting on a bond. Oracle credit default swaps have also increased in price lately.
By JCM9 2025-11-1420:59 Coreweave has taken on a ton of debt to pay for everything they’re building. Investors can make money by lending Coreweave money and charging interest (aka a bond).
Separately, investors can buy a derivative product that is a bet that Coreweave won’t be able to pay this money back. This is a called a “credit default swap.” If Coreweave starts missing payments or can’t pay back the loan this instrument pays out.
The price of the instrument is linked to the likelihood that Coreweave won’t be able to repay the money. Given growing questions around their financial business model the price of these derivatives has been rocketing up over the last few months. In plain speak this means the market increasingly thinks Coreweave won’t be able to repay these loans.
Thats mirroring broader Wall Street sentiment these last few months that the math isn’t adding up on AI and all the spend committed isn’t mapping out against money likely to be available to pay for all that. Investors are increasingly making plays for the AI bubble popping and the price of these credit default swaps shooting up is one metric indicative of that downturn positioning.
The data on this is available in various financial data platforms and has been written about by financial news outlets.
By FL33TW00D 2025-11-1416:26 Very interesting data point
By BiraIgnacio 2025-11-1419:371 reply Fascinating. I don't follow nor really understand this space. Is this type of fluctuation unusual?
By JCM9 2025-11-1421:05 It’s not good, and is a sign the market is getting increasingly bearish on the future of AI from a business standpoint. That doesn’t mean the tech is bad, but these are signs Wall Street is saying the math doesn’t add up here and thus there’s storms building on the horizon.
By jesuslop 2025-11-1416:56 I like the logic you use, let me borrow that.
By francisofascii 2025-11-1416:353 reply Oracle stock down 25% for the past month, but still up 35% for the year and 300% for 5 years.
By smallmancontrov 2025-11-1418:072 reply Are they building something useful or did Larry just snag a bunch of GPUs, flip the gpu time for good money, and extrapolate mega exponential growth in his guidance?
By hylaride 2025-11-1419:40 TL;DR NVIDIA didn't want to have customers be overly concentrated in the 3 already established cloud providers (GCP/Azure/AWS), so reserved kit for others. Oracle won out for essentially being a distant fourth (if even that? Their accountants make Oracle cloud look much larger than it is).
By zombiwoof 2025-11-1419:38 [dead]
By phoronixrly 2025-11-1417:51 Yeah.. I came hoping to find a silver lining to AI, but completely expecting I'd find this comment.
By Spivak 2025-11-1418:10 This is every hopium "Stock in Thing You Don't Like Plummeting" article where it's the tiniest little dip at the top of a peak that makes Everest jealous once you zoom out.
By Elizer0x0309 2025-11-1419:284 reply I still believe in AI and I believe many of these companies are going to be staples of this new era.
That said, I hope Oracle doesn't survive this transition. We need higher moral companies to usher in the AI era.
Companies with high morality, do those even exist? Which one of the big tech companies do you expect to work towards benefiting humanity instead of focusing on turning a profit by any means?
By duxup 2025-11-1420:14 Big companies? I don't know.
I know plenty of small tech companies that really do care about their customers top to bottom.
There's no magic way for anyone to validate that claim because if I named them, nobody would know, there's no way to really know these things anyway. But they exist.
By ojbyrne 2025-11-1419:44 Definitely true, but Oracle is the worst, has been for decades.
By brandensilva 2025-11-1420:221 reply That's the point of having a government for the people by the people.
But when you let billionaires take over that too then the people have zero protections from exploitation.
If they cared they would invest in America paying more taxes, ensuring citizens are educated and capable of leading their companies versus offshoring and even competing with them.
They don't want that and prefer their monopolies instead.
And as an aside, let's deep dive into the kind of person Larry Ellison is. Guy literally bought out an island where he rules as almost-a-king. You can't do shit in Lanai without Larry's say-so, and if you move out of Lanai or you quit/lose your job working for Larry, your only option is to sell your home back to him.
By quickthrowman 2025-11-1513:371 reply Please don’t anthropomorphize Larry Ellison.
By r0b05 2025-11-1516:01 Touché sir.
By siliconwrath 2025-11-1615:05 Maybe Costco?
By insane_dreamer 2025-11-1421:35 > We need higher moral companies to usher in the AI era
I agree that Oracle scrapes the bottom of the moral barrel.
But OpenAI, post-Altman-coup, is right there at the bottom with them.
Not sure that Google, Amazon and Microsoft are that much higher.
By surgical_fire 2025-11-1419:45 > We need higher moral
Like Google? Microsoft? Meta? Amazon? Those staples of morality?
Or like companies such as OpenAI that just stole industrial amounts of copyright to train their models?
Morality has left this building a long time ago.
By brandensilva 2025-11-1420:14 I've never been a fan of Oracle to begin with given my love for open source but after Larry Ellison is out there preaching about a surveillance state America he became a "person I can ignore" to a "person a despise".
