Transcription
Oracle have built a circular network of billion dollar partnerships, each relying on the other as the AI wars accelerate. And join us now is Michael Wolff, activate CEO and co-founder. And like so many things, it kind of looks good and makes sense. But then you realize that times in the past, things like this haven't necessarily turned out.
>> Yeah. I mean look, there's a lot of chatter.
>> Is it. Okay.
>> Well there's a lot of chatter saying it's a bubble. And the reality it's it's not.
>> I mean the vendor finance, the the insular relationship between, you know, companies that are, you know, doing business with each other, being funded by each other.
>> It's all it's really it's really not vendor financing. This is you've got you've got all of these companies. They're all investing, making huge investments in infrastructure. And in this level of investment, of course, they're all going to partner up to do it, but they're investing really because there's going to be real demand. And the real demand is here.
>> Andrew, we talked about I mean, are we worried about it or not. It can it end badly?
>> The question is why it's being done this way. Right.
>> Money's got to come from somewhere.
>> Well, the money's got to come from somewhere. But you don't have no concern at all about how you're taking companies that effectively can't afford to make the commitments that they're making, right. They can't afford to make the commitments they're making, just empirically, they don't have the cash. Right. And so they are getting the money from in the case of Nvidia, they're getting the money from the folks who are they're making the commitment to buy the chips from and using that money to go buy the chips. Meantime, you can look at the AMD deal, which is the reverse of that, which is okay, we can't afford to buy the chips, but we know that if we commit to you, your stock is going to go up. We'll take warrants in your stock. Your stock is going to go up as a result of this. We're going to be able to take the money from that and go buy the chips that we also couldn't afford to buy.
>> A couple couple answers to your question. One of them is that they're going to buy this stuff some other place. Yes, they're investing in each other in a lot of ways. This isn't when people talk about it's circular. It's actually much more like a hub and spoke I mean, Nvidia at this moment. For the moment, Nvidia has a virtual monopoly on on the chips that power everything else. And of course, where we're seeing this kind of investment, a lot of this just comes down to one thing is the demand going to be there, and all of the signs are that the demand.
>> By the way, I'm not arguing to you, the long term AI is not going to be some amazing thing. I'm a big believer, and I'm a big believer that open AI will be amazing and and AMD and Nvidia will all have a future. I'm not suggesting this all. All I'm suggesting is in 1999, we had a hiccup more than a hiccup. Right? And that's what happened 2000. And you could have a shift in the sentiment in the marketplace right now, for whatever reason, the stock market is giving folks higher valuations when they say they're going to spend more. That's unusual.
>> But because it's an expectation that there's going to.
>> Be there could be. Right. But there could be a moment where the market says, you know what, we don't like it this way. We're just not. And there were there were times, by the way, even with Amazon and others where they said, you know, this is not going to work for us. And when those moments happen, if enough of that happens at one time, things start to break. But.
>> But but there's a here's where there's the difference, which is in in the late 90s, what we saw was the equipment companies Nortel and and others making huge investments. Lucent and others, they were they were they were giving credit right to Worldcom, sprint, AT&T to buy equipment. But the demand wasn't there. When the demand didn't materialize. They they really they couldn't pay back that credit.
>> By the way. Yes. There's demand. The question is, is there demand at prices that are even close to profitable. No. So yes, there's demand at not a, you know, by the way, there was demand for MoviePass too. But the economics of it didn't work.
>> So the economics didn't work. But but not at this scale. I mean, we've got look at it from a consumer perspective today. You've got ChatGPT 5 to 6 billion visits each month. And the and the revenue is there. I mean, it's and it's growing fast. But you've also and but that compares to Google today which is close to 200 billion visits a month. And so much of what Google is going to deliver is when you go to a query, it's going to deliver an answer with Gemini. So when people.
>> The marginal cost of delivering that answer is so much higher than what it was.
>> Absolutely.
>> Okay. So that's but that's a real issue.
>> Right. Well the the market for the longest time with many of these companies and certainly with the Mag-7 has been willing to bet ahead of ahead of.
>> Let me.
>> Ask you and.
>> Here we are today, it's the we're in 2025 October 10th. What do you see that you had to look up the year I just watched I.
>> Did it's.
>> He looks at it in terms of when his book is coming out.
>> No, no, let's let's think about October 10th of 20, 35 years from now. Okay. And my question to you is will these companies be profitable then.
>> Will these companies be profitable. Some of them will be profitable, some of them won't. It depends on how they're accounting.
>> And how much time do you think that the marketplace, the investor class is going to give folks? That's that's the question, right? That's the dream. And by the way, you could look at Tesla and say, here was a company that was given a by the way, Amazon too was given an enormous runway to go do this. And that became capital became a competitive advantage. Right. And so that could happen to AI. I'm not saying it can't. I'm just saying there's certain things. And by the way, back in the day we called it circular. They also called it round tripping. And people didn't like round tripping.
>> No they didn't, they didn't before that they called it check kiting. But this is not that. I think that the market is going to continue to bet. Actually, the reason why the market is betting on companies when they're spending is because it's an indication that they're going to be investing, that they're not going to be left behind, they're not going to be the losers in this.
>> Did the AMD run up of 25% on that stock on the news of the deal with OpenAI? Makes sense to you.
>> It may. It makes sense because now we've got we've got another AMD then becomes a real competitor in this. I mean, up until now really it's been Nvidia. Nvidia is the monopoly. Give some breathe some new life. And it makes it look like AMD could also be in this game.
>> Can I throw one other question at you, which is if these companies are as successful as I think they ultimately actually need to be to sustain these kind of valuations and to have the kind of investor support we're talking about, they're going to have to create a lot more productivity in our economy. Now, productivity is also a euphemism, typically for less jobs. And so if you have either mass unemployment or just a lot of unemployment, how do you think that that in and of itself impacts the rest of the economy and maybe even these companies themselves?
>> Yeah, there's so many different points of view in terms of whether it's going to create fewer jobs or more jobs and more demand. I mean, here's something that happened today. Chat starting today, ChatGPT is no longer an app. It is it is now a super platform because you can go on to it today, DoorDash, Expedia, all of those. You can go there. So suddenly it's creating it's creating demand that that wasn't going to be there in the past. Yet a lot of the applications today.
>> It's going to create demand that wasn't. Oh, so you don't think that that's just a swap. You actually think that it's going to create demand demand for ChatGPT or for these services.
>> For these services?
>> So you think there wasn't demand for these services? Oh, okay. Then you and I are going to completely disagree. I think the distinction is instead of going to Uber Eats here, I may go to Uber Eats there, but I don't think that I go to Uber Eats more as a function of the fact that I am on ChatGPT.
>> Absolutely. You'll go more. You'll you'll absolutely. It's it's this is exactly it will make it much more convenient. It is the place that that you will go. It will dramatically improve the the traffic and the volume of of those businesses.
>> For all of those businesses. Well, at some point it's going to do it for everybody. And therefore then it's just a substitution story.
>> Well, it hasn't been if you look at the experience.
>> There are some game.
>> Well, I don't agree. I think that that if you look at the app business, please. Yeah, look at the apps business, you, you end up seeing what happened with, with the iPhone as soon going back to 2007, as so