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Who to Know: Larry Ellison
When you think of the upper echelon of the global tech elite, Larry Ellison probably doesn't come to mind. But on Wednesday, the 81-year-old Oracle chairman briefly became the world's richest person with a fortune of nearly $400 billion, overtaking Elon Musk.
Ellison's $100 billion jump was biggest single-day gain ever and the result of Oracle's promising growth forecast, in which they touted hundreds of billions of dollars in incoming revenue from artificial intelligence companies leveraging Oracle's cloud computing capabilities. Ellison's incredible rise can be attributed both to the dynamics of the current artificial intelligence boom and his own approach to corporate financing.
Low level in the stack – Oracle doesn't do well by any measure. The company did not meet analysts' earnings expectations and has projected three more years of negative cash flow. One industry publication reported that the company had just undergone significant layoffs.
But at the moment we are in the AI hype phase, in which the main funders of AI are not the end users, but the AI companies creating the products. That means the biggest beneficiaries are companies lower in the stack, including chipmakers like NVIDIA and Oracle, which owns and operates data centers that provide cloud infrastructure to other artificial intelligence companies.
Oracle's ability to solve the enormous logistical challenges associated with building superclusters frees AI companies from the operational burden, making them an attractive partner. And they often charge less than their competitors. As a result, they have signed contracts worth hundreds of billions of dollars with companies like OpenAI and xAI. When Oracle announced these deals and all of these future earnings on Wednesday morning, the company's shares jumped about 38%.
This is the one you know – It doesn't hurt that Ellison has strong relationships with other of the world's most powerful people. Ellison hosted a fundraiser for Trump in 2020, was spotted at Mar-a-Lago during Trump's fundraising efforts last year, and in January became a major partner in Trump's Stargate Project, which aims to build a $500 billion artificial intelligence infrastructure in the US. Ellison has also been close to Musk for a long time: in 2022 he agreed in a text message to Musk asking him to contribute a billion dollars or “whatever you recommend” to his efforts to buy Twitter.
Crazy ransom – But many companies are making crazy profits from the AI boom—so why did Ellison make such a uniquely huge profit? The answer lies in how many shares of Oracle he owns. Ellison owns 41% of Oracle, almost double what he owned fifteen years ago. That's because over the past decade he and Oracle have embarked on one of the largest share repurchase programs in corporate history, sometimes taking out loans to finance share buybacks.
Investors like stock buybacks because it increases the value of their own shares. But there are many critics of this strategy, who argue that it prioritizes short-term gains over long-term investments in infrastructure or R&D. Chuck Schumer has called stock buybacks “one of the most self-interested things corporate America does.”
Because Ellison owns so much Oracle stock, his net worth fluctuates up and down with the stock price. That's why its value soared past Elon's this week, only to return to $376 billion a day later.
What you need to know: Regulatory sandbox proposal
Ted Cruz has long been one of the artificial intelligence industry's biggest allies in Congress, arguing that the industry needs to be left alone to spur growth and innovation. On Wednesday, he introduced legislation that would protect artificial intelligence companies from regulation as they experiment with new technologies.
The bill would create a sandbox in which companies could apply to have certain rules waived for two-year periods for up to ten years. Cruz received support from OSTP Director Michael Kratsios, who came to Cruz's hearing on Wednesday and said anti-innovation regulations are a “huge problem for our industry.”
Cruz's bill has a long way to go before it is passed. Many Republican senators, including Marsha Blackburn and Josh Hawley, are seeking legislation to mitigate the harms of AI. Meanwhile, voices on the left responded with disgust. Consumer advocacy group Public Citizen wrote that the proposal “allows companies to skirt accountability and treats Americans as test subjects.”
AI in action
Hours after the murder of right-wing commentator Charlie Kirk in Utah, President Trump posted a video on social media condemning the tragedy from the White House. But was it really him? Within minutes, claims spread online that the video was created by artificial intelligence, with amateur sleuths pointing to the instantaneous disappearance of Trump's finger and the video's saturated colors.
However, experts were skeptical about this theory. “We reviewed this video and found no evidence that the audio or video was generated by artificial intelligence,” said Hani Farid, co-founder of cybersecurity company GetReal Security. wrote on LinkedIn. He said the finger distortion could have resulted from “local manipulation of the video.”
However, the reaction to the video showed how difficult it is to believe everything you see online these days, thanks to advances in artificial intelligence-powered deepfakes. Fake videos are considered real; real videos can easily be ridiculed as fake. (Trump himself fired Video of a bag “likely created by artificial intelligence” being thrown out of the White House.)
Some companies, such as Google, have implemented watermarking systems to distinguish real videos from fake ones. But for now, it seems like viral videos are spreading faster than they can be verified. In this confusion, it is likely that people will simply stick to their preconceived notions of truth and fiction, thereby making the Internet even more fragmented and contentious.
What to read
“AI is coming for YouTube creators” Alex Reisner, Atlantic
Reisner found that artificial intelligence companies are downloading millions of videos from YouTube, many of which contain training videos, to train their AIs. By learning from these masters, AIs can now replace them by offering advice, thereby threatening to render the original human experts obsolete.
