Firstprinciples

[Firstprinciples @F1stprinciple]

@IndianGems_ So all serious patients will be turned away by hospitals.. 🤷‍♂️

[Firstprinciples @F1stprinciple]

@Iamsamirarora Both are true.. AI adoption + offshoring with outcome based pricing is the eventual end state

[Firstprinciples @F1stprinciple]

@EmergingRoy @LiveFromALounge @arunvenk lol, singapore carts have an infra red square around them and if something comes in the way, there is an automated voice that calls out, Dubai carts have a horn and drivers calling out.. not sure why this is controversial except you hate that you aren’t the one in the buggy

[Firstprinciples @F1stprinciple]

@dmuthuk In indian cities I have never got more than 6-7km mileage in the last 15 years.. be in my original Civic or the BMW and Merc that followed

[Firstprinciples @F1stprinciple]

What’s with all war mongers and war financiers dying in quick succession?

[The Spectator Index @spectatorindex]

BREAKING: Qatar's previous Emir Hamad bin Khalifa Al Thani has died

[Firstprinciples @F1stprinciple]

@LiveFromALounge @arunvenk It’s the general attitude of some walkers towards that’s the issue.. ‘why should I give way’ , just pay for the buggy service (like Pranaam) else give way to those who have paid for it .. standing in the middle is just needless aggression

[Firstprinciples @F1stprinciple]

@abhishekmspatil @arunvenk Nope airport buggies everywhere have some kind of a horn.. try traveling outside once in a while

[Firstprinciples @F1stprinciple]

@PunamMohandas @arunvenk Haha, bhikaris like you who can’t afford Pranam or business class but get jealous of those who can is the reason why they have to honk.. go back to third class compartments in trains and beg there

[Firstprinciples @F1stprinciple]

@arunvenk They don’t have a choice given that the lane is narrow and there is a travelator for pedestrians.. dubai and singapore airports have the exact same proposition.. they honk as well.. difference is that the airlines walkers are more civil and they give way without blocking

[Firstprinciples @F1stprinciple]

@JoeyMannarino Wait for England to lose and see what happens

[Firstprinciples @F1stprinciple]

Good to see ratings agencies act before a crash.. little suspicious though

[Ricardo @Ric_RTP]

OpenAI just got OFFICIALLY flagged as a company that might not be able to pay its bills.

S&P Global Ratings just cut Oracle's long term credit rating from BBB to BBB-.

One more cut and Oracle becomes a JUNK rated company for the first time in its history.

But the reason S&P gave is what's really interesting here...

They named OpenAI as a "key credit risk" inside the report.

OpenAI is a private company. It carries no credit rating and has never been profitable.

And a ratings agency just took the risk of that company failing and wrote it directly onto the credit file of a public company held inside pension funds and bond funds all over the world.

OpenAI accounts for roughly HALF of Oracle's remaining performance obligations. That's the famous $638 billion backlog every bull points to as the reason to own the stock.

Half of the asset is the risk.

And then there's the maturity trap:

Oracle's data center leases run 15 to 19 years. Its cloud customer contracts run about 5 years. Oracle disclosed both figures in its own annual report.

So Oracle is signing 19 year obligations to serve 5 year promises made by a customer that has never earned a dollar of profit.

If OpenAI cannot pay, Oracle gets left holding data center leases it may not be able to exit, and may have to re-lease to somebody else on worse terms.

That is the entire downgrade in one sentence.

The numbers underneath:

Oracle spent roughly $55.7 billion on capital projects in fiscal 2026 and posted negative $23.7 billion in free cash flow.

S&P now expects the fiscal 2027 cash flow deficit to widen to around negative $42 billion. That is nearly DOUBLE its previous estimate, and the agency admitted it had underestimated how much Oracle would need to spend.

Oracle plans to raise up to $40 billion in fiscal 2027, including a potential $20 billion share sale that would add roughly 4.8% to its share count.

They literally cannot borrow more without triggering the next downgrade, so shareholders are being diluted to protect the bondholders.

And the funny part is that on the day of the downgrade, Oracle's stock went UP 2.65%.

But on that same day, the spread on Oracle's BONDS widened.

Equity investors looked at the $638 billion backlog and bought. Credit investors looked at the identical company and demanded to be paid more for the risk of holding it.

Credit investors are the ones whose entire job is to price what goes wrong, so they just repriced Oracle.

For context, Microsoft is rated AAA, Alphabet is AA+, and Amazon is AA. Oracle is chasing the same AI contracts from seven to nine notches further down the ladder.

The day after the downgrade, the UK named Oracle, alongside three other cloud providers, a critical third party to the British financial system. Supervision by the Bank of England begins July 13.

Oracle is the only one of those four sitting one notch above junk.

Now follow the chain:

OpenAI has never made a profit. OpenAI is half of Oracle's backlog. Oracle is one downgrade from junk. Oracle is now formally load bearing infrastructure for British banks.

The business risk of an unprofitable private startup has traveled through a corporate balance sheet and landed inside the supervisory perimeter of a central bank.

Nobody designed that. It happened one contract at a time.

And the demand IS real. Oracle's cloud infrastructure revenue grew 93% last quarter.

If this buildout works, it becomes one of the great corporate reinventions in history.

But the whole structure now rests on one question that no rating agency, no bank and no regulator can answer:

Can OpenAI pay its bills?

[Firstprinciples @F1stprinciple]

@deedydas These feel like good old IT consulting shops. No moat and as the training capex cycles slow down, a bunch of them will inevitably pivot to consulting

[Elon Musk @elonmusk]

@sama We start flying them next year. Maybe you can come see them if your parole officer approves.

After stealing an open source AI charity, you then stole all of Apple’s phone technology! Wow.

What do you plan for an encore? That’s tough to beat.

[Firstprinciples @F1stprinciple]

@Mr_Derivatives Bro we are in an earnings bubble not a valuation bubble

[Firstprinciples @F1stprinciple]

@teoriadacons Lol, it has a helpful yellow label as well?

[Firstprinciples @F1stprinciple]

@jeremymstamper “If you want, I can also expand this into a more forceful version or reshape it into a legal‑style defense” … 😂😂😂

[Firstprinciples @F1stprinciple]

@jbaerofficial Nope, they make 60-70% inference GMs on newer models, inference GM drops to 20% on older models as pricing compresses .. Training though is another lovely 20 billion away

[Firstprinciples @F1stprinciple]

@obsidiancap1 Run rate of what?

[Firstprinciples @F1stprinciple]

@avataram Sir kalangarthala why are you blessing us with this crap on our timeline… rage bait engagement slop