Oracle Corporation (ORCL)

So why are they willing to do this when others aren’t?

My interpretation is this: the other hyperscalers are making their best guess expected value calculation while Oracle has an expected utility calculation they’re making.

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In uncertain conditions, individuals will optimize for expected utility rather than solely expected value. For example, if a favorable casino offered a gambler a bet that they have positive expected value on, BUT the catch is they have to bet their home on it. A person with one home should not make that bet, but someone with ten homes should. (I have no doubt this is deeply flawed to any economist reading this article.)

Whether or not Amazon, Google, and Microsoft lever up to invest even more in this boom, there’s no additional utility for them. They’ll still be one of the big three cloud vendors.

But Oracle, by taking the additional risk with leverage, DOES get expected utility from this. They can move from being a distant fourth-place cloud vendor, to becoming one of the “big four” cloud vendors.

So when you ask Larry Ellison if he’d rather play it safe and stay where they’re at, or make the bet others aren’t if the result is a state change in how Oracle is viewed, he’ll take that bet every time.