Thursday! American clothing rental service StitchFix continues to struggle, as its recent quarterly results lay out. Despite declines in active clients and revenue, however, the company is projecting a return to growth in its current quarter and new fiscal year. StitchFix’s economics were always a little weird, but the company is an interesting bellwether for a segment of consumer spending so I’d be loath to see it be delisted or bought out.
In better news, U.S. GDP growth in Q2 came in better than expected thanks to recent revisions — a rise in personal consumption was the key driver in the data rework. At the same time, signals that the labor market is healthier than expected are trimming expectations of a rate cut in October. To work! — Alex
📈 Trending Up: Rick Perry? the TikTok deal … OpenAI in Germany with SAP … SAP in trouble … xAI’s lawsuit cannon … CoreWeave, thanks to OpenAI … Databricks, thanks to OpenAI … media dealmaking
📉 Trending Down: Apple-EU relations … no more Starbucks on every corner … US-SK relations … economic growth in India? … support for POTUS’s Fed moves
Things That Matter
AI is expensive: How will OpenAI afford its massive data center ambitions? Easy. It’s not paying for all of the hardware. Oracle is shouldering much of the required costs, and is therefore issuing $18 billion worth of new debt this week. The new debt comes in several tranches, with maturities stretching from September 26, 2030 to September 26, 2065.
Oracle is already a heavily indebted company. It has $9.1 billion worth of current “notes payable and other borrowings,” another $82.2 billion of non-current notes payable, and another $14.1 billion worth of “operating lease liabilities.” What’s another $18 billion?
The new debt is anchored with OpenAI as the core tenant, allowing Oracle to borrow without too much worry, while OpenAI can get its mitts on the compute it needs without having to borrow all the money. Oracle, after all, is a profitable company, unlike its new AI partner. It’s likely much cheaper for Oracle to borrow than it is for Sam Altman.
The new debt underscores Oracle’s broader ambitions, especially as TikTok’s future is now reportedly resting on its racks. It’s expensive to take on the existing hyperscaler cohort, though more players will beget more competitive pricing for customers. Azure, AWS and Google Cloud probably don’t love the crowding marketplace, but on these pages, we don’t cry for companies worth more than $1 trillion.
Microsoft Moves: Redmond’s slow-decoupling from OpenAI continued this week, with the enterprise software giant adding Anthropic’s Claude Sonnet 4 and Claude Opus 4.1 AI models to Microsoft 365 Copilot, per The Verge’s Tom Warren. The deal is a coup for Dario and company, but probably not a world-changing partnership just yet. Users have to opt in to use Anthropic’s models, but can switch to OpenAI’s models when they want.
Microsoft is also building its own models to add a third AI option to its software products that doesn’t include adding to someone else’s gross margins.
CO is also tracking Google’s moves to bring Android to PC-like form factors. Historically, attempts to bridge the gap between desktop and mobile computing have failed (RIP Windows 8), and Apple simply decided to build a different OS for each kind of device. The thought of an Android PC is interesting (perhaps as a touch-screen laptop setup), but who wants to live in the walled-off domain of mobile computing while on their real computer?
Who isn’t working to save Intel? After the government’s forced stake, Nvidia’s $5 billion share buy, and SoftBank’s $2 billion investment, now Bloomberg reports that Intel also approached Apple for help.
Per BBG, “Intel has approached Apple about securing an investment in the ailing chipmaker,” which could provide yet more cash. Given that Intel’s now-undivestable foundry business burns billions every quarter, the former chip leader could use the cash.
There’s a fun political angle to consider, too! To avoid random tariffs or trade disruption from the White House, investing in the government’s now pet chip company is probably a good way to curry favor. Ew.
AI is expensive: British neocloud Nscale just raised what it calls the “largest Series B in European history.” The company got a $1.1 billion investment from Aker ASA (Norwegian investment company), with additional funding from Blue Owl, Dell, Fidelity, G Squared, Nokia, Nvidia, Point72, and T.Capital.
Nscale is an OpenAI partner under the larger Project Stargate umbrella, and ‘Stargate Norway’ is a joint effort that will yield “deliver 230MW of capacity with ambitions to expand by an additional 290MW” in time. (Norway is becoming a hub for global compute thanks to low-cost power and its freezing climate.)
Nscale is also working with Microsoft to build the “UK’s largest AI supercomputer” on Nscale’s AI campus in Loughton.
Nscale says it will build “strategically located data centres that harness some of the lowest-cost renewable energy in the world.” That is no small claim given the potential for high-carbon AI footprints in regions where power comes more heavily from hydrocarbons.
The Global War for Tech Talent is Accelerating
The plan to charge higher fees for H-1B visas in the United States leaves much to be desired, even putting aside the meat of the policy itself. The WSJ describes the decision as a “gimme” of sorts to Trump’s anti-immigration supporters, aimed at smoothing over concerns regarding the newly announced pay-to-play ‘gold card’ that will allow the global wealthy to secure U.S. residency.
At the risk of sounding British, that might not be the best way to determine U.S. immigration policy. Regardless, the White House rescinded much of its original H-1B plan, including yearly fees and retroactive application of the new regime. Some chaos abated.
For more on the impact of immigration on the American tech industry, head here.
But tech companies are still unhappy, especially startups. The gist is that by closing the high-skill talent pipeline, American companies now have a greater incentive to hire abroad instead of at home. That’s contra to the current ‘return to office’ push that many tech companies are pursuing.
Y Combinator’s Garry Tan was publicly irked, as one could see from his LinkedIn post:
This current policy outcome = massive gift to every overseas tech hub. Cities like Vancouver/Toronto will thrive instead of American cities. In the middle of an AI arms race, we’re telling builders to build elsewhere. We need American Little Tech to win—not $100K toll booths.
This is not a small point. The United States has long leveraged twin magnets — our capital markets attracted both investment and lots of global IPOs, and our freewheeling economic system made our country the place to build startups. These startups often become world-straddling goliaths; eight of the ten most valuable companies in the world are American, as are 21 of the top 25.
Worse, if you view the current AI race through a geopolitical lens, having fewer brains self-export to our shores is doubly troubling. Not only are we pushing talent spend abroad, we’re losing some of our ability to staff up domestic firms and compete internationally on what could be the next hinge technology in human development (or not, if you are an AI bear).
The H-1B program had issues; no one denies that. But using a shotgun to massage your shoulder doesn’t help.
British tech folks are, of course, capitalizing on this, shouting that if you are now shut out of the United States, or perhaps worry that you are no longer welcome, you should go build in the U.K. (more from Inc.). Recall that British investor Harry Stebbings is also working on Project Europe, which wants to pair young founders with more experienced talent. Europe is chomping at the bit to retain its talent, attract more founders and accelerate its own startup flywheel.
Canadian media is similarly excited about the chance to attract more tech talent as my nation attacks itself. India will benefit, too, and I doubt that as many South Koreans want to come here as before. Germany’s already trying to pull Indians.
Then there’s China, which is rolling out a new, low-paperwork visa for tech folks:
The new K visa, which goes into effect on 1 October, is aimed at attracting foreign professionals in the fields of science, technology, engineering and mathematics, or STEM, by making substantial changes in visa regulations for the first time in over a decade.
Unlike traditional work or study permits, the K visa enables young foreign graduates to enter, study and work in China without first securing a job offer, research placement, or local sponsor, according to new guidelines published by Beijing.
The United States and many of its denizens — myself included — have taken it for granted that startup founders and high-end tech talent would want to come here. We’re doing our best as a nation to stem the tide of brilliance. And while our star dims, other constellations will grow brighter.
Perhaps we should be less stupid.