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What Oracle's Fall From Grace Tells Us About The AI Data Center Business

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 Oracle's stock price is diving. Why? A lesson for the AI industry. An AI data center customer faces no switching costs as they are simply installing data and software in bare metal servers leased to them by the data center. The result is a buyer's market as opposed to the traditional sellers market in which Equinix and Digital Reality operate. Oracle, the software company, reinvented itself as a cloud provider and then pivoted to AI data centers when the cloud angle proved disappointing and AI became hot.  But in a traditional data center the customer installs their equipment and this makes leaving the facility very expensive and difficult as it means they lose an operating network node. In many cases the exit costs can be in the millions of Euros or dollars and require a network redesign to ensure traffic flows are not disrupted. So the traditional data center is more like the Hotel California in the Eagles song where you can check in, but never leave.  In contrast, mos...
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Nvidia Playing Russian Roulette: Backstopping OpenAI's $250 Billion Committments

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Nvidia guaranteeing OpenAI's 250 billion in data center commitments is a huge gamble given that OpenAI is forecasting it will burn through $665 billion in cash by 2030. Nvidia's entire future depends on OpenAI's success or failure. The lack of prudence and financial discipline is astonishing. Russian roulette, anyone? History is quite clear: never finance money losing customers. Any credit check would have disqualified OpenAI using its own financial projections. For more details, https://thetechcapital.com/nvidia-to-backstop-250-billion-of-openai-data-centre-commitments/.
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The False Prophets of SpaceX Hegemony

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Just a few months ago Linkedin Prophets were proclaiming SpaceX hegemony. It was in their words 'a space utility' that would dominate space infrastructure due to 'vertical integration', Musk Infallibility, and 'rocket launch cadence'. Now their only excuse is 'short selling' as though $18 billion in annual revenues naturally implies Space is worth two trillion dollars. This inference is built on the flimsy foundation of rocket usability and 'they launch a lot of stuff into space'. In fact, SpaceX is a space trucking company. Logistics. There is no intellectual moat, and in fact, SpaceX has no patents on rocket design. Not a single one. It has an edge on rocket design, but textbook economics tells us abnormally high profits attract competition and similar designs. Just last week a Chinese company completed their first successful reusable rocket launch.
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New FCC Subsea Regulatory Framework Targets SLTEs

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The FCC is introducing a new regulatory framework for subsea cables. The previous approach involved a Federal interagency group known as Team Telecom reviewing each cable landing and the associated owners of the subsea network. Team Telecom includes representatives of the FCC, Department of Defense, Department of Justice, and Homeland Security. Moreover, advisory agencies include Department of State, Treasury, Commerce, Director of National Intelligence, Office of the US Trade Representative, and General Services Administration. Consequently, approval delays were common as well as regulatory overkill because each applicant must go through the same steps regardless of previous successful applications. The new regulatory regime places applicants in different risk buckets. Low risk applicants can bypass Team Telecom and quickly get a landing license approved. An applicant shows it is low risk by meeting the following requirements. 1. Applicant certifies compliance with ten F...
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Update On WACS & 2Africa Outages

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It turns out that the CS Sovereign, a Global Marine ship whose home port is Portland, UK, is sailing down the West African cost to Abidjan to fix WACS. Why was the Sovereign chosen when it is so far away? Every cable system has one or two storage depots where fibre is kept for repairs. WACS spare fiber and other repair supplies are kept at Brest, France. Now Orange Marine has a cable ship, the well known Léon Thévenin, at anchor in Capetown, South Africa. But if the supply depot is in Europe, a nearby cable ship becomes useless. It all makes eminent sense because WACS connects both the UK and Lisbon to West Africa and the cable was laid from the UK to Lisbon and down the West African coast. So the starting point for deployment was Europe and hence that is where the spare supplies are located. However, this is a severe logistical mistake since most WACS outages occur between Senegal and Congo, not in European waters.
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SpaceX Stock Nosedives ...

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Fear is gripping the SpaceX Faithful as they watch their Dreams of Dominating the Galaxy evaporate in the harsh glare of market financial scrutiny. Short term the market is a voting machine. But long term, it's a calculating machine. August 5th is the quarterly earning release. It will show more massive losses just like 1Q2026. Moreover, the investors that financed SpaceX as a private company will soon be able to sell their shares and given the downward price trajectory, they will not hesitate to sell. 😉 I think the stock's fair value is in the 30s. I recommend a buy when it gets there. 😄
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WACS & 2Africa Repair Ship Repair Update

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The cable ship repair permit has been granted. It is expected to arrive off Abidjan on July 22nd. The 2Africa cable will be the first repaired despite its outage being limited to the Cote d'Ivoire branch. WACS repair is expected to begin at the month's end. The ASN Ile D'Ouessant cable ship left Capo Verde last week and will arrive in the Gulf of Guinea this Wednesday.
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