Youtube·2025-09-23 22:29Core Viewpoint - The market is currently rewarding partnerships in the AI sector, but there is a need to scrutinize the underlying economics of the companies involved, particularly comparing established players like Microsoft and Nvidia with marginal players like Oracle and Coreweave [1][2][4]. Company Analysis - Major companies such as Microsoft, Amazon, and Google have a low cost of capital around 5% and are achieving returns of approximately 20%, indicating strong financial health and customer bases [2]. - In contrast, marginal players like Oracle and Coreweave may have to borrow at rates of 10-12% and are only achieving mid-single-digit returns, which is seen as value destructive [3][4]. - The valuation of Oracle is questioned, as it is suggested that it should not trade at a higher multiple than Microsoft or Nvidia, given that Microsoft is creating value while Oracle is perceived to be destroying it [5][6]. Market Dynamics - The initial AI trade was centered around Nvidia and Microsoft, which have captured most of the value, while marginal players are now trading at higher multiples despite their weaker fundamentals [4][6]. - There is skepticism regarding Oracle's stock performance, as it continues to rise despite its debt and the risks associated with its reliance on OpenAI, which may not be a stable customer [9][11]. - The significant market cap increase for Oracle, based on its relationship with OpenAI, is viewed as potentially misleading, as the company may not be able to fulfill its obligations due to overbooking capacity [11].