Work in... Canada?
And: If Oracle’s RPOs all come good, it will be in fine shape.
Welcome to Cautious Optimism, a newsletter on tech, business and power.
Thursday. Yesterday’s Fed cut was welcomed by markets. It’s too early to celebrate, however. JPow reckons the United States might be dramatically overestimating hiring rates in the country. Which would imply an even weaker labor market than we’re currently executing policy against as inflation remains sticky. Yeck. To work! — Alex
📈 Trending Up: European fintech consolidation … China’s electricity edge … state-based AI regulation … White House support for the Tate brothers … a16z in South Korea … Google-media relations? … startups Fervo Energy, Port, Runware, Harness, and Oboe …
📉 Trending Down: The legal immigration process … the rule of law … Venezuelan oil transport … edtech valuations … AI cybersecuity risks …
Things That Matter
Disney + OpenAI: Disney is bringing its IP to OpenAI’s Sora video generation service. (Sora is currently ranked #21 on the US iOS App Store; ChatGPT is in pole position, Gemini in second, and Grok in eighth.) The entertainment giant will also invest $1 billion into OpenAI (with warrants for future share purchases), become a “major customer of OpenAI, using its APIs to build new products, tools, and experiences, including for Disney+, and deploying ChatGPT for its employees,” while bringing some Disney-Sora creations to its Disney+ service.
A coup for OpenAI. Disney IP is unavoidable in American culture (just try to raise a kid without its products creeping into your life). OpenAI is still the leading consumer AI company. Bringing the two together not only solves a legal headache for OpenAI, but it gets capital and revenue from the same deal. A good day for Sam.
Oracle whiffs: Shares of Oracle are sharply lower today — down 13% as I write to you — after the company missed revenue expectations in its most recent quarter. Oracle reported revenues of $16.06 billion, less than the anticipated $16.21 billion. That miss combined with greater-than-expected capex outlays and more negative free cash flow than investors feared, combined to put Oracle’s stock in the blender.
The news is not all bad. The company is spending heavily ahead of a massive pile of anticipated revenue. Oracle reported remaining performance obligations (RPOs) of $523 billion at the end of its most recent quarter, up 438% on a year-over-year basis. In its sequentially preceding quarter, the tally was $455 billion.
If Oracle’s RPOs all come good, it will be in fine shape. (All that needs to happen is for OpenAI to continue its growth curve for another few years.) Today, however, the negative cash flows have arrived while much of the company’s anticipated revenue growth from those investments has not. We’ll know who is right about Oracle’s value in a few quarters.
Read this: Atreides’ investor Gavin Baker went on Patrick O’Shaughnessy’s podcast to chat AI, scaling, GPU coherence, and more. It’s a delightfully dense interview, and one that I intend to read again. Pay special attention to the implications of the tech market learning how to effectively utilize new Nvidia GPUs and the implications thereof for the coming generation of AI models.
The first Nvidia Blackwell GPU-trained models will come in “early 2026,” per Baker. As we recently learned via Google’s Gemini 3 model that “scaling laws for pre-training are intact,” we should anticipate that “Blackwell[-trained] models are going to be amazing.” Onward!
Trump wants to Foxify CNN: Earlier this week we learned that Larry Ellison (Oracle) and his son (Paramount) complained to POTUS after WBD chose Netflix’s bid for most of its assets over their own, with Ellison the Younger promising that if they were allowed to buy the media company whole-cloth, they would make changes to the news group.
Changes that POTUS desperately wants. In comments yesterday, the President said that he “will be probably involved maybe involved in the decision,” adding that:
Well in my mind, but I mean maybe I could be talked out of that by some very talented people that we have, antitrust people. But I just think that the people that have run CNN — into the ground, by the way, nobody watches, very few people watch — I don’t think they should be entrusted with running CNN any longer. I think any deal should be guaranteed and certain that CNN is part of it. Or sold separately. But I don’t think the people that are running that company right now, and running CNN, which is a very dishonest group of people, I don’t think that should be allowed to continue. I think CNN should be sold along with everything else
The last time we touched on this topic, we compared moves by POTUS to help place media assets into the hands of oligarchs friendly to his administration to what happened in Hungary under Orbán. Still fair. But the rot from forcing WBD to abandon its preferred deal for one the White House favors would corrupt the dealmaking process, replacing free-market capitalism with a patronage system where pleasing the executive branch matters more than bean counting.
Bad for free speech, bad for capitalism, and bad for, well, everything.
Chips for China, land for Russia, scorn for Europe, redux
As the United States clamps down on illegal and legal immigration, major tech companies are ramping up their investments in Canada and India. This week, Microsoft boosted its investments in Canada to CAD$19 billion through 2027, while pledging $17.5 billion worth of investment in India through 2029. Amazon announced $35 billion worth of investment into India through 2030.
We could read those announcements as indicative of American tech companies betting that AI will have massive impact on the two large economies (India is the world’s fifth largest economy, Canada the tenth). I think the move is also a human talent hedge. If folks can’t come work in the United States, perhaps they can work in Canada, where time zones align. Meanwhile, India has a host of smart, educated tech workers that, if they can’t be brought and plugged into American tech campuses, perhaps will have to stay put.