"The difference between God and Larry Ellison? God doesn't think he's Larry Ellison." This quip about the founder of Oracle was used as the title of a famous biography published in 1997. Almost 30 years later, Larry Ellison, the "old-timer" of the technology sector, has shown that the octogenarian is still sprightly and capable of setting records. In mid-September, during a memorable trading session, Oracle's management announced that it had signed a USD310 billion contract with Open AI. Once the initial shock had passed, it became clear that the markets were being rather generous: this spectacular contract is not expected to generate any profit before 2030 and will require colossal investments. By adding more than $300 billion to Oracle's market capitalization, it seems to us that investors are jumping the gun a little. Warren Buffett liked to point out that during the gold rush, sellers of shovels and pickaxes often made their fortunes faster than many of the gold prospectors. The same may be true today with AI. The champions of AI are currently highly valued, while the players who will make tomorrow's AI possible (particularly those capable of transforming electrical infrastructure and producing more electricity) are valued much lower. We are discussing these topics and their investment implications in more detail in this newsletter.
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