Tag Archives: Baby Herman

That is at times the setting. It is basically defined under ‘the cost of doing business’ and at times companies big and small go under from that overset risk. It is of course due to the pussies overhang nations that they made all this ‘tax deductible’ and as such governments and its citizens  pay the price in the end. So as we see seeking Alpha giving us ‘Microsoft: An OpenAI Problem’ (at https://seekingalpha.com/article/4867091-microsoft-an-openai-problem-rating-upgrade) a few settings with in the first place “First, given that 45% of RPO comes from OpenAI, MSFT stock is now a beta around the pessimism that surrounds this startup, especially in the last week”, as well as “the market is throwing the baby out with the bathwater. Microsoft is part of the software infrastructure industry, which is dragging down tech” which all seems to make sense, but in that same setting what does set the matter separate is “I don’t think Microsoft will write down its RPO due to OpenAI not being able to pay in the future, but I’m mindful shares could remain under pressure in the near term” and here I am considering the larger stage of “due to OpenAI not being able to pay in the future”. A setting that too many are overlooking. The ‘AI’ baby of all greed driven entities are not looking at what is holding up this figment value. It lost against Google’s Gemini and I understand and I also herald the setting that a lost battle is not a lost war, but too many are ignoring this fact because they are seemingly going all in and bad news is seemingly being filtered away. And in the second we see Seeking Alpha giving us “I think Microsoft has two main problems right now. One of them is called OpenAI (OPENAI). The sentiment around Sam Altman’s firm is anything but positive, and in this piece, I will discuss the key issue that is pressuring the most important startup in the world. The other factor is the selloff in software. Microsoft is part of the software infrastructure industry, and the risk-off move among investors is way too strong.” And why do I think that?

Because these vultures are feeding Oracle to the wolf wannabe’s and to the turmoil of the greedy driven capitalist waves of whatever floats their boat, whilst Oracle is the one stage that is the most  stable at present. Now that the game is close to up for some, now we see that Microsoft is having a problem all whilst no one is clearly digging into the settings of OpenAI as well as the settings that processors and even energy cycles should be having. These facts are casually thrown aside and there is something massively wrong with the stage we see here.

And as we are given (by Seeking Alpha) that “Aside from one point. RPO was up 110%, totaling over half a trillion dollars ($625B to be precise). While any company would have jumped double digits following this announcement, the fact that 45% of that RPO is attributed to OpenAI makes the quality of the backlog questionable (in my modest view)” because what ROI is OpenAI actually giving its shareholders? Where is the profit? It is not there and it will not be there for at least 5 years (a number voiced by some). As such the equation doesn’t seem to hold, but the investors went all in on this and they are playing some kind of poker (where you increase the investment doubling again and again until the pay off comes, I am not into poker) and that is the problem. So what is RPO here? Remaining Performance Obligation or Recovery Point Objective and in the second question setting, we wonder where that the Remaining Performance at the Recovery Point exactly is? You see, at no point in this article we see ROI (Return on Investment) and why not? Is the story that this is 5 years pending too hard to sell?

So, as I see it, it is 2008 al over again but the impact will be much harder, the economy does not have the resilience to go through that again and the US Administration is throwing a dozen sabot’s in that engine, as such the impact will be a lot harder and I spoke of that almost 6 months ago (not sure where) and as we look into this we see no answers and isn’t that weird? The players who are all about ROI and revenue forgoing that setting? So where are Sam Altman, OpenAI and Return on Investment? Even Bloomberg is telling its readers that ‘Microsoft’s Deal With OpenAI Now Viewed as a Risk, Not Reward’, so where are all these Bloomberg wannabe’s? It seems that the stakeholders are filtering out what some need to know right of the bat and that seems not to be coming (at present). In addition to all this Seeking Alpha gives us “The pressure on margins due to the buildout should have been priced in since October 2023! I think it is pretty much mainstream (ask your cab driver next time, for real) that the hike in depreciation is a natural effect of the AI buildout. However, and this is the main risk to being bullish right now, I don’t think the market is willing to recognize this fact. I think the market wants to see a return on the AI data center buildout, and any deterioration in earnings (both revenue growth and margins) is used as an excuse to head for the exit. This remains the largest risk, as Q3 will see a deterioration in Q3 gross margins (per management guidance).” Personally I see that Microsoft should survive this, but to what extent? I want to be clear here, because I have given an anti-Microsoft view before (they deserved this), but here I am out of my depth because I do not have an economic degree. But the people at Seeking Alpha did (a speculative expectation) and the stage of “pressure on margins due to the buildout should have been priced in since October 2023” is something that we haven’t seen, did we? At least I never did (mainly because I do not care) but the people who did, did they see that?

The entire setting smells like yesterday’s diaper (see: Baby Herman) and no one seems to be catching on that something doesn’t feel right. So will the investors claim foul play when they lose their investment? Will the stakeholders be held against the light? All valid questions and I am certain that no answer will follow by anyone who has the valid jurisprudence title and now that the Federal Reserve is no longer hands of Jerome Powell, it will be anyones guess what comes from that corner.

Have a great day today.