Tech Brew Ride Home - Oh THAT $300B Contract With OpenAI…

Episode Date: September 11, 2025

Well we now know one of the big contracts that sent Oracle shares flying. OpenAI of course. We have another IPO pop. YouTube videos now have multilanguage dubbing. Is it risky to bet on just one version of AI? And a deep dive analysis of how Oracle got AI religion. Oracle, OpenAI Sign $300 Billion Cloud Deal (WSJ) Klarna Climbs 15% in Trading Debut After $1.37 Billion IPO (Bloomberg) Microsoft's first preview of Visual Studio 2026: Deeper AI and a design refresh (The Register) YouTube’s multi-language audio feature for dubbing videos rolls out to all creators (TechCrunch) AI’s $344 Billion ‘Language Model’ Bet Looks Fragile (Bloomberg) How Oracle’s Larry Ellison rode the AI ‘tsunami’ (Financial Times) Paris 1944: Occupation, Resistance, Liberation: A Social History Learn more about your ad choices. Visit megaphone.fm/adchoices

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GoogleFi Wireless is not subject to data traffic deprioritization during times of high network usage. Welcome to the TechBrew Ride Home for Thursday, September 11th, 2025. I'm Brian McCullough today. Well, we now know one of the big contracts that sent Oracle shares flying yesterday. It's Open AI, of course. We have another IPO pop. YouTube now has multi-language dubbing. Is it risky to bet on just one version of AI and a deep dive analysis of how Oracle got AI religion? Here's what you missed today in the world of tech. Sources say that Open AI has signed a contract with Oracle to purchase $300 billion in computing power over roughly five years, starting in 2027, quoting the journal. The deal is one of the largest cloud contracts ever signed, reflecting how spending on AI data centers is hitting new highs despite mounting concerns over a potential bubble. The Oracle contract will require 4.5 gigawatts of power capacity roughly comparable to the electricity produced by more than two Hoover dams, or the amount consumed. by about 4 million homes. The Open AI and Oracle contract, which starts in 2027, is a risky gamble for both companies. Open AI is a money-losing startup that disclosed in June. It was generating roughly $10 billion in annual revenue, less than one-fifth of the $60 billion it will have to

pay on average every year. Oracle is concentrating a large chunk of its future revenue on one customer and will likely have to take on debt to buy the AI chips needed to power the data centers. Oracle gave a first 10 of the deal when it disclosed in a June filing it had struck a cloud services agreement that would give it more than $30 billion in annual revenue starting in 2027. The cloud giant will receive more yearly revenue from OpenAI over time as more data centers come online. OpenAI announced in July that it struck a 4.5 gigawatt deal with Oracle but didn't disclose the size of the contract. The massive OpenAI commitment extends chief executive Sam Altman's long history of dreaming up the seemingly impossible to solve for the host of business challenges

he is facing. He is also trying to build custom chips with Broadcom, create an iPhone competitor, and launch a new cloud company called Stargate from scratch, all while burning more money than virtually any other startup on the planet. Last fall, he told investors that OpenAI won't generate a profit until 2029 and expects to lose $44 billion before doing so, the Wall Street Journal reported. His biggest problem is a near-constant computing shortage that is hampering the rollout of OpenAI's products and constraining progress building new AI models. It is also a broader issue for the AI industry, which is pouring hundreds of billions of dollars to build new data centers across the country, at times straining local power supplies.

From this year to 2028, spending on chips, servers, and data center infrastructure is set to reach $2.9 trillion, according to Morgan Stanley, to help fund the build out. Tech companies are turning to a vast and emerging pool of outside debt that has been compared to a modern gold rush for Wall Street financiers. Open AI for years relied on Microsoft to exclusive. provide its computing power but recently received an allowance to find new providers after growing frustrated with supply shortages. Oracle is working with the data center builder Caruso, among others, as part of the deal. They are looking to build data centers in locations across the country,

including in Wyoming, Pennsylvania, Texas, Michigan, and New Mexico, according to a person familiar with the matter. Compared with Microsoft, Amazon, and meta, the biggest spenders of the AI age, Oracle has a far greater debt load relative to its cash holdings. The cloud company's spending to keep up with the AI boom is already outstripping its cash flow, according to S&P Global Market Intelligence. Microsoft has a total debt to equity ratio of 32.7% compared with 427% for Oracle, end quote. Let me caveat this segment by acknowledging that the company we're about to talk about has been, and might even today be a sponsor of this podcast. But I can't let that affect the fact that we have to talk about another first-day IPO pop.

Klarna's shares closed up 14.55% at $45.82 in its New York Stock Exchange debut yesterday, giving it a greater than $17 billion market cap after the company and some of its backers raised $1.37 billion in its IPO, quoting Bloomberg. Though stock options and warrants add a bit to that valuation, it's a steep drop from the $45.6 billion. figure reached in 2021 at the height of the COVID-19-fueled online shopping bonanza. A private funding round, the following year sent the valuation plunging to $6.7 billion as a cocktail of inflation and higher interest rates, put pressure on fintech business models around the world, including

Klarna's position as a provider of so-called buy-now pay-later financing. To Klarna, chief executive officer Sebastian Simeatowski, the IPO cements the evolution of Klarna's business beyond its roots in Buy Now Pay Later. The firm, which rose to prominence during the pandemic era jump in e-commerce, has more recently been making a push into offering other banking products like savings, checking accounts, and credit cards. Investors finally were asking very few questions about Buy Now Pay Later, which was very nice to see the message and the success of Klarna coming across. Ziamatowski said in an interview that this isn't just a buy-now pay later, that we offer

all types of payment methods and that we offer the card and all types of retail banking financial services, end quote. Founded in Stockholm, the company has been expanding its offering of its fair financing product, which allows customers to pay off larger ticket items over a longer period of time. While that's provided a boon in net interest income, the push has also weighed on results because Klarna is required to book larger provisions for potential credit losses on these longer-term loans. For now, such loans amount to about 2% of Klarna's total transactions, and earlier filing

with the U.S. Securities and Exchange Commission showed. The company expects that share to grow. row after the number of merchants offering the fair financing loans doubled in the last two years. Klarna has spent the better part of the past year preparing for its public debut. As the firm readied its listing earlier this year, though, it was thrown into disarray as markets went haywire amid U.S. President Donald Trump's tariff announcements. Simeatowski hit pause on the offering before bringing it back to life in recent weeks. He said one of his favorite memories from the roadshow was when a staffer of one of his

investors approached him about getting a credit card from the fintech. The guy at the security says, oh, you're from the road. Clarna, the 43-year-old CEO recalled, and he's like, I want to get the card. I'm on the waiting list. Just get me the card. So I think that was probably the height of the whole thing, end quote. The listing comes as the U.S. IPO market is heating up with shares of companies, including Circle Internet Group and Figma surging in their attention-grabbing market debuts with Clarnas listing. First-time share sales this year have raised $25.7 billion, excluding closed-end funds and other financial vehicles above the $20.4 billion raised in the same period of 2024, according to data

compiled by Bloomberg, end quote. This is big news for you. Dev's listening, Microsoft has released its first preview of Visual Studio 2026, the first major version update since November 2021 with a new design and, of course, deeper AI integration. Quoting the register, Visual Studio is the second most popular IDE after VS code, so the first major update in five years sounds like a big deal for developers. Visual Studio 2022, also known as version 17.x, was first released in November 2021. The new version will be 18.x. Yet, based on the information revealed by Principal Product Manager Mads Christensen and the registers download of

the preview, the changes are incremental rather than revolutionary. Changes highlighted by Christensen include a new logo, the renaming of Visual Studio preview to Visual Studio Insiders, refreshed UI using Microsoft's fluent design system, improved theming with new themes including Mango Paradise and juicy plum, and of course deeper AI integration. These are not things that developers care much about, AI aside, but there is more information in a recent presentation on the future of Visual Studio and in the release notes. VS2026 has more hooks to enable co-pilot to get context and intervene, enabling features such as the profiler co-pilot agent, which will benchmark code, look for potential optimizations, and implement them on your behalf. Another example is adaptive paste where Copilot will automatically adjust pasted code to fit the context of existing code. URL context in Copilot lets developers reference a URL in the chat, such as asking the AI to follow guidelines in a web document. Visual Studio users will be able to choose their own LLM, a drop-down-enabled selection of different models,

and developers can apply their own API key for a provider for which they have a subscription, selecting between Anthropic Google and OpenAI. Settings in VS2026 are now based on an editable JSON file, and the Settings Dialogue has rich filtering features, such as the ability to see all settings that are not the default. Settings can be checked into source control and travel with a project. Code coverage, which shows how much code is covered by unit tests and was previously a feature unique to the Enterprise Edition, has been enabled for VS community and professional. Christensen said that VS2026 is backward compatible with extensions for VS2020. which is good news for developers upgrading,

but perhaps another clue that the changes are not dramatic, end quote. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium and a year of Xbox GamePass Ultimate

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The rollout is expected to happen over the coming weeks. The feature initially, launched as a pilot in 2023 available to a limited number of creators, including Mr. Bees, Mark Rober, and Chef Jamie Oliver. Creators had to work with third-party dubbing services until YouTube introduced an AI-powered auto-dubbing tool that leverages Google's Gemini technology to replicate a creator's tone and emotions. Since its launch, YouTube reports that several testers have seen success with this feature. On average, those who uploaded multi-language audio tracks saw over 25% of their watch time coming from views in the video's non-primary language. Jamie Oliver's channel, for instance, tripled in views after using multi-language audio tracks.

Additionally, the company has been testing multi-language thumbnails with a select group of creators. Since June, creators have been able to customize thumbnails to display text in other languages, catering to their international audience. The localized thumbnails are designed to include text that matches the viewer's preferred languages, end quote. Over in Bloomberg, Parmy Olson has an interesting warning for the entire AI sector. Quote, every investor knows not to put all your eggs in one back. basket. So why is Silicon Valley betting on just one way to build artificial intelligence? This year, the world's four largest tech firms will spend $344 billion on AI, mostly on

data centers used to train and run so-called large language models like chat GPT that can process text, audio, and visual content. The technology is largely underpinned by the same technique of predicting tokens that appear next in a sequence. Could a novel approach to AI suddenly upend all the capital being spent on chatbot technology? Perhaps China's Deepseek offered a glimpse of how unconventional approaches can surprise the market when it released a smaller, more efficient model in January and posted its blueprints on the web. Deepseek's model was an LLM, but its method signaled that all the resources being poured into AI research today drove a tide that could raise other boats. Through its history, AI has moved forward by blending past insights with new ideas

and the pursuit of super-intelligent machines may demand no less, end quote. Essentially, Parmi argues that while Silicon Valley fixates on LLMs, a parallel track might be rising. Startups like Covariant build perception for robots, drones, scientific, and climate systems that must react to the physical world in real time. Altman Labs is reviving pre-deep-learning deep-minds pre-chat GPT push in reinforcement learning and game-playing AIs. Meanwhile, cracks are showing in the transformer model and the attention LLMs, soaring costs, marginal gains, and stubborn hallucinations hinder adoption of AI in health and legal work. A nature study recently found that social reasoning relies on brittle features, and critics abound.

None other than Jan Lacoon recently called LLMs a dead end. Mere token generators, in his words. Finally today, from the F.T, a deep dive look at how Larry Ellison, briefly, the world's richest man yesterday, and Oracle CEO Safra Katz capitalized on the AI boom and vaulted Oracle into contention with industry giants in this AI moment. Quote, AI is fundamentally transforming Oracle and the rest of the computer industry, though not everyone fully grasps the extent of the tsunami that is approaching, Ellison told investors. Equally, Ellison 81 himself was slow to recognize the importance of cloud computing,

which he once dismissed as complete gibberish. With the rise of generative AI, though, he has alongside Katz, seize the opportunity to vault Oracle into contention with industry giants such as Amazon and Microsoft in the race to win huge data center contracts. Oracle's ability to successfully ride the AI tsunami now depends on if it can deliver the hardware it is promised and on whether its roster of clients will ultimately be able to pay for it. A large chunk of its future AI business comes from a five-year deal with ChatCHIPT Maker

Open AI worth $300 billion, according to people familiar with the matter, Oracle's AI hopes are closely tied to the loss-making AI startup's ability to finance its own future growth. Oracle is now a one-way bet on Open AI's ability to raise hundreds of billions of dollars of new capital, says Charles Fitzgerald, an angel investor and former Microsoft executive. Executives provided few details this week about how Oracle itself would finance the massive increase in capital investment required to fulfill these contracts with Open AI and its AI rivals or what kind of profits it would generate. Fitzgerald added that it was unclear how Oracle would make a decent return from its AI spending, since its strategy of selling access to large clusters

of Nvidia's GPUs to train and run AI models was a highly competitive business that did not leave room for significant margins. Oracle executives have claimed that the company has superior technology, including better networking capabilities, enabling it to run giant cloud systems far more cheaply than others, end quote. Remember, Oracle's history goes back to the late 1970s as a database vendor, and, as pointed out above, it almost entirely missed the early cloud wave. Becoming a key supplier of AI infrastructure has been its chance at redemption. Analysts called the shift dramatic. Once cast as a laggard, Oracle is now landing marquee deals as demand for compute explodes. Former insiders say leadership was slow to grasp AWS's threat, for example, and the company's

Cloud Push misfired for years, but a second phase began around 2022, hiring veterans from Amazon, Google, and Microsoft, doubling down on data center expertise and selling dedicated single-tenant capacity that appeals to companies' training proprietary models. Oracle has also undercut rivals on price and benefited as competitors hit capacity limits, allowing it to scoop up work others had to pass on. Open AI became a flagship customer last year. The relationship has grown into a five-year multi-billion dollar commitment, as mentioned a lot today. Also, the commitment to the $500 billion Stargate program, including a two-gigawatt

site enabling Texas. Political ties helped secure the bite-dance TikTok work to host U.S. data deals with meta-XAI and Nvidia followed, boosting investor optimism. Still, margins and execution remain open questions. As one analyst put it, Oracle's promise to demanding AI clients is essentially, we'll build this, trust us. It's time for another edition of Brian's late-night insomnia history lessons. The motto of this segment should be, I can't sleep, and so you get to learn something. Last night, when I couldn't sleep, I was reading this great book called Paris 44 by Patrick Bishop about the liberation of France in World War II. Link in the show notes, if you want to give it a go. It's extremely readable. Anyway, I did not know that the writer J.D. Salinger was a war reporter,

covered D-Day and all that. I'm learning tons of things that I didn't know about. Salinger, actually, including how he got his teenage girlfriend stolen from him by none other than Charlie Chaplin, who ended up marrying the woman in question, Una. Yes, there was a bit of an underage scandal there, etc. But more interestingly, if you were old enough to have grandparents who were in World War II, the cliche was always they never wanted to talk about it. But that really wasn't a cliche, at least in my experience. They did not want to talk about it. Well, listen to this quote from a Salinger story, which he wrote at the time before the war was even over, quote, I believe, as I've never believed in anything else before,

that it's the moral duty of all the men who have fought and will fight in this war to keep our mouths shut once it's over, never again to mention it in any way. It's time we let the dead die in vain, end quote. So see, I guess that was just in the zeitgeist. We're going to fight this thing and we're never going to talk about it again. Weird how that works, you know, how everyone can. have the same idea all at once without even collectively deciding on it. Anyway, talk to you tomorrow. Ambition comes in all shapes and sizes. At First Citizens Bank, we roll with your goals

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