Oracle Scores $300B OpenAI Deal & Digital Creators Get Huge Tax Break

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.

0:34Good morning for your Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, a new robo-taxi company is rolling into Vegas. Will it go blackjack or bust? Ben, on your left, Elon. Oracle founder Larry Ellison is the new richest person in the world. It's Thursday, September 11th. Let's ride.

0:55It's a somber morning here in the United States, which is marking 24 years since the September 11th attacks. Many of you have that crystal clear day seared into your memory. I was in fifth grade when hijacked planes crashed into the Twin Towers in New York, the Pentagon, and western Pennsylvania, killing nearly 3 ,000 people. Ceremonies and tributes to the victims will be held in cities across the country, including at Yankee Stadium, where President Trump will be in attendance for tonight's game. Meanwhile, Americans are still in shock after conservative influencer Charlie Kirk was killed yesterday.

1:27He was shot from an estimated 200 yards while speaking at an event at Utah Valley University. He was 31 years old. It's another instance of an attack on a political figure in the U.S. following the assassination of a Minnesota state rep and her husband in June, and last summer's assassination attempt on President Trump. Quick update on the hunt for the shooter. It's entering its second day. Authorities had taken two suspects into custody, but have since released them. The search remains ongoing. And now onto the show, starting with a word from our sponsor, Indeed. Neil, don't distract me. I'm trying to innovate.

2:02Innovate what? I want to make hiring and job seeking easier for everyone involved. Hate to be the bearer of bad news here, buddy, but Indeed's been doing that with their AI-powered solutions for both employers and job seekers. What, are they leveraging huge amounts of data to make hiring faster and easier? Yes, it's literally what they're talking about. Today at Indeed Future Works, our Morning Brew coworkers are there right now. Oh, well, in that case, I guess you can learn more at IndeedFutureWorks.com slash brew. That's IndeedFutureWorks.com slash brew. Larry Ellison is 81 years old. He's got a full head of hair.

2:35And now he's the richest person in the world. After Oracle, the company he founded and now chaired, searched 35 % yesterday. Ellison's personal fortune soared by$89 billion, pushing him to a nearly$400 billion net worth and into the top spot over his pal Elon Musk. Behind the surge was an earnings call that had analysts practically giddy with excitement. Guggenheim's John DeFucci said he was blown away. TD Cowan's Derek Wood called it momentous quarter. Deutsche Bank's Brad Zelnick said we're all kind of in shock. Ironically, Oracle actually missed earnings expectations in the past quarter, but no one cared.

3:12Investors were locked in on future guidance. Its cloud infrastructure business, which supports the computing requirements of AI companies, is set to grow 77 % this year to$18 billion. But then the company projects$32 billion in revenue in 2026,$73 billion in 2027,$114 billion in 2028, and$144 billion by 2029. Add it all up, and Oracle says it has$455 billion in booked revenue, up 359 % from last year. A huge chunk of that comes from one company, though, Morning Brew. Just kidding. It's OpenAI, who, according to reports, agreed to purchase$300 billion alone in computing power over the next five years.

3:57Neil, the staggeringly high backlog of business that Oracle tees shows that AI companies are certainly planning to keep on spend, spend, spending. Meanwhile, Oracle looks to be the biggest picks and shovel winner of the AI gold rush. Now all it has to do is live up to those lofty revenue expectations. A piece of cake. Shades of NVIDIA here in terms of an old hat Silicon Valley company catching fire because of AI Oracle expects its revenue to double over the next three years. And this was already a massive company worth about$500 billion. But due to that stock gain yesterday, it overtook some of the other biggest companies in the world.

4:32JP Morgan, Walmart, Eli Lilly, Visa. It all passed those yesterday. wave goodbye and Larry Ellison wave goodbye to Elon Musk becoming the richest person in the world. Just astonishing projections in terms of how much how much sales this company expects to grow over just the next few years, thanks to AI. But still, it's going to be tough to actually deliver on those expectations because it's going to have to build out a lot of infrastructure to support those contracts. That's going to require a ton of power, four and a half gigawatts of capacity. That's as much as the Hoover Dam creates, actually two Hoover Dams worth of power right there.

5:10They're also going to have to get their hands on a whole bunch of NVIDIA GPUs, which have been in hot demand. Obviously, they're going to have to get permits to build out all these data centers as well. So the one thing that Oracle thinks that it has an advantage on over fierce competition from the likes of AWS and Azure from Microsoft is that they are more focused on the process of inferencing, that is when AI models are kind of getting the answers that you read on your computers or phones. That is a little different from the training that a lot of other cloud providers are providing these AI companies.

5:46So they think that they can do it, but there's still a long road ahead to realizing all of that nearly half a trillion dollars in revenue. It's been an amazing pivot for Oracle, which I'm not sure that many people know exactly what they do. But for decades, they were a database provider. They sold software to these big companies. And they did a pretty good job at that because they were a huge company. But growth was fine. It was they were growing at an average of about one point six percent per year. And now that growth is going exponential because now they are selling or they're renting out computing on these servers, which was going to require a lot more capital expenditures.

6:22They were spending about one point six billion dollars per year in CapEx. And now, as you mentioned, they have to actually build a lot of physical stuff, which is going to require$35 billion in CapEx now. So they're going to spend more, but the potential is so much greater than this legacy database business. People were kind of doing some back in the napkin math here yesterday once we realized that OpenAI was one of the biggest customers. Right now, OpenAI makes about$10 billion in revenue of year. Pretty solid, but nowhere near profitability. Their commitment starting in 2027 is to spend$60 billion with Oracle going forward.

6:55So that is six times current revenue just to secure compute. Technically, the only way to support spend like that is for ChatGPT to become essentially Google over the next five years, just become so ubiquitous and so money-making that they are allowed to do this. So everyone was kind of scratching their heads going, huh, we're kind of relying on some pretty lofty revenue assumptions coming down the pipeline for a company that is nowhere near profitable right now. So maybe some cracks forming in that$300 million pledge. Oracle right now is reaping the rewards, but we'll see again if this stock surge actually amounts to real revenue going forward.

7:33And Larry Ellison is just living his best life as the 81-year-old richest person in the world. He owns 98 % of the Hawaiian island of Lanai. He revived the Indian Wells tennis tournament in California and recently he's been going on a spending spree in Oxford. He just bought a pub that was the hangout of J.R.R. Tolkien and C.S. Lewis for$10.7 million. This pub was not for sale. And then he went and just kept writing bigger checks. And finally, the pub is his. So, you know, he's just doing the billionaire thing right. Moving on, when Trump's one big, beautiful bill came with a no tax on tips provision, there was some head scratching as to what incentives it would create and to who it would apply to.

8:11Well, thanks to a Treasury Department's preliminary list, we now know which occupations will be able to deduct up to$25 ,000 in tips per year going forward, and the list may surprise you. There's the typical service workers and bartenders, but the list also included digital content creators. So that means Twitch streamers, OnlyFans, and yes, your favorite podcasters are now allowed deductions on any virtual cash left on the proverbial table. That inclusion could shift the business model of creators who typically earn their revenue through ads, subscriptions, and brand sponsorships. But now the new rules make digital tips disproportionately attractive since they can be written off in ways other revenue streams cannot.

8:51And while tipping someone on your screen might feel a little odd for some, it's becoming more commonplace. More than a quarter of large U.S. influencers classified as over 100 ,000 followers reported earning tips last year according to a study from the Creative Class Group. Neil, this tax provision is set to expire in 2028, But in the meantime, we might not be that far off from a future where audience reflectively tip their favorite podcast host the same way you leave 20 % after a meal. This is absolutely going to change the economics of the creator economy right now. Creators do work on various platforms like TikTok, YouTube, Twitch, Snapchat, OnlyFans.

9:27And there are a variety of ways they can monetize this through advertising revenue. Some of these platforms have creator funding programs as well. But you can bet that these platforms right now, because they want to attract all of the creators as they can, because that also brings eyeballs to their platforms, are going to roll out these incredibly lucrative and visible tip buttons everywhere. And when you're ever going to watch a YouTube video or your favorite Twitch streamer, you can bet that going forward, they're absolutely going to be asking you to tip them rather than buy a particular subscription or anything else, because it is the most tax advantages way in order that they get paid.

10:00Yeah, and I do think that this is the coming of age of creators as almost a political block as well, because obviously both parties have been trying to get these influencers on their side. Actually, since the election, the Trump administration has added a new media seat in the White House specifically for creators. So they are trying to get these influencers to these press events. And so by giving them tangible tax relief, technically you are providing not just financial benefit. You're saying like, hey, we want you as our voting block right now. So it looks like we are seeing this young, influential, very online becoming offered material incentives in order to kind of align themselves with a certain political party because they've just become so powerful in today's modern age.

10:45It'll be interesting to see how this no taxes on tips or at least, you know, specifically deducting$25 ,000 in tips from your income will impact the broader economy because it does impact digital creators, but also so many other occupations and is going to change incentives up and down the board. Here's just a list of some other professions that will be impacted. DJs, clowns, ushers, maids, gardeners, electricians, house cleaners, toe tuck drivers, yoga instructors, cobblers, skydiving pilots, ski instructors, parking garage attendants. These are all of the 68 professions that are included in this no taxes on tips.

11:22Now, it will have a big impact for these people, but it's not going to be a huge amount of people because more than 37 % of tipped workers over one third earned income low enough that they didn't even face any federal income tax. This goes back to 2022. So for the people who are going to be impacted by this, it will it will have a huge effect on their finances. But there are a large group of tipped workers for whom this does not apply. Zoox, the driverless car startup that would look real nice over a triple word square, has finally launched its service to the public in Las Vegas. Starting yesterday, you can take a Zoox robo-taxi among several popular venues near the Strip, including Topgolf, the Luxor, and Resorts World.

12:04And because there are no drivers, what happens in a Vegas Zoox stays in a Vegas Zoox. With its Sin City launch, Zoox joins the increasingly frenzied race to roll out driverless taxis across the U.S. Google's Waymo is the leader of the pack, operating in five cities and having surpassed 10 million paid rides to date. Tesla is far behind, but also in the hunt, with robo-taxis currently bopping around Austin and an invite-only service ongoing in the Bay Area. So where does Zoox fit into the picture? Well, while it sounds like it belongs in a Dr. Seuss book, it actually belongs to Amazon, which acquired Zoox for$1.3 billion in 2020.

12:39Amazon's deep pockets means Zoox can offer its Vegas service for free, at least in the first few months, allowing it to build a strong user base before it expands its presence to other parts of Vegas and beyond. But Toby, the name isn't the only Seussian thing about Zoox. These cars are something that the cat in the hat would roll up in. They are freaky looking, Neil. Let's start on the interior. They have no steering wheel or pedal, so they are fully committed to being an autonomous vehicle. They're symmetrical front and back, They also have bi-directional wheels, so they can go forward and backwards without turning.

13:14They have two rows of seats that are facing each other, so it's meant for conversation. This might be something that doesn't feel very Vegas. They have floor-to-ceiling windows that are technically for sightseeing, but that means also the public can see inside the car itself. They are, of course, electric vehicles as well. I'm just going to say that a lot of people compare it to a toaster on wheels. That is the number one thing you'll see when describing a Zook. So they are freaky, but it was almost a reflection of a philosophical bet that they took that we do not even want to retrofit cars for autonomy like Waymo has been doing with Jaguars and Chrysler or even Tesla, who's been using their normal cars and trying to turn them into self-driving robo taxis.

13:53They wanted to start from scratch. They wanted to reimagine what a car even is. And apparently what they came up with was a toaster on wheels. And they have to manufacture these themselves. It is like an all-in-one thing that Zoox is doing. They're saying we're not going to retrofit cars. We're making our own that are specifically designed for driverless vehicles. They have one site, one manufacturing site in California. Right now, it's chugging out one Zoox, one toaster on wheels per day. They want to get that up to three robo taxis per hour when it's at full scale. Right now, Waymo has about 2 ,000 vehicles in its commercial fleet.

14:27So they want to pump out a lot of Zoox. And they can do that because they are backed by Amazon. All of these driverless car companies are being subsidized by their broader parent companies, or Tesla is being subsidized by its other divisions in its company, because analysts don't expect any of these companies, in terms of their robo-taxi businesses, to be profitable until 2030. So right now, it's a turf war. They're all going to all these different cities in order to grab market share as the race heats up. Now, let's take a quick break and come back with Neil's Numbers. What does the future hold for business?

15:04Ask nine experts and you'll get 10 answers. It's a bull market. It's a bear market. Rates will rise or fall. Inflation's up or down. Can someone invent a crystal ball? Until someone does, over 42 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one AI cloud ERP, bringing accounting, financial management, inventory, and HR into one fluid platform. With one unified business management suite, there's one source of truth giving you the visibility and control you need to make quick decisions. With real-time insights and forecasting, you're peering into the future with actionable data.

15:38When you're closing the books in days, not weeks, you're spending less time looking backwards and more time on what's next. Whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. Download the CFO's Guide to AI and Machine Learning for free at netsuite.com slash brew. That's netsuite.com slash brew. You know what today is, Toby? Tuesday? No, it's Indeed Future Works, which you can join virtually right now. Also, it's not Tuesday, buddy. That last part is up for debate. But what's not up for debate is what a great opportunity this is.

16:14And Morning Brew is on the ground covering it right now. Indeed has been reshaping the world of work with AI-powered solutions for both job seekers and employers. Combining this with the scale of their data, Indeed is transforming the hiring landscape to simplify and accelerate the job search and hiring. This is why AI will be a pretty big topic at Indeed Future Works today and tomorrow. It's not just inspiration, it's actionable strategies to future-proof your workforce. Check it out at indeedfutureworks.com slash brew. That's indeedfutureworks.com slash brew. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will feel like putting on a tweed coat.

16:55For my first number, as if you needed any more reason to get mad about health insurance, they're going to raise prices by the most in 15 years. Yeah, according to a report by Mercer, the cost of companies' health insurance plans for employees will increase by an average of 6.5 % in 2026, the biggest jump since 2011. And for those of you who get your health insurance on government exchanges, the median increase will be 18 % more than double last year's rise, according to KFF. Health care costs are already straining American households even before the upcoming price hikes. The recent average for family coverage was about$25 ,000 or the price of a small car.

17:33Insurance companies blame higher costs for their need to raise prices. UnitedHealth, the country's largest insurer, said it was increasing prices in Maryland and Oregon because of tariff uncertainty and the cost of bringing pharma production to the U.S. Others blame the fact that Americans are using health care services more and the proliferation of pricey drugs like GLP-1s. And unlike companies in other sectors, health insurers aren't in a financial position to eat those higher costs. Centene, which is taking heat in Arkansas for raising premiums by up to 54%, is the third worst performer in the S &P 500 this year.

18:05United Health is also among the worst stocks in the S &P, plunging 38 % so far this year. Yeah, tariffs have this kind of hidden tax beyond consumer goods. You, of course, expect them to show up in stuff like electronics, but hitting an industry like health care is not something in health insurance, not something that you would normally associate with tariffs whatsoever. But I also do think that AI is weirdly playing a role here that is leading to an escalation in cost. Blue Cross execs say that providers are using AI more aggressively to figure out how to create faster and broader escalation in cost.

18:44And so just like AI is disrupting the white collar jobs, it's also quietly inflating health care bills alongside it. But yeah, just that number of twenty five thousand dollars, the price of a small car is kind of staggering to wrap your mind around, especially because it is set to increase at its fastest rate in 15 years. For my next number, there's been a curious surge in the number of ninety nine unit residential buildings being built in New York City. In fact, over the last four quarters, 28 permits for 99 unit buildings were filed, which is more than double the total from the previous 16 years combined, according to Bloomberg.

19:19It's not that developers are obsessed with Aaron Judge. It's an unintended effect of a new law. A rule passed last year allows New York developers to claim a tax break if they include a certain number of affordable housing units in their projects. But once you reach 100 units or more, then you must pay workers$40 an hour, which developers say is financially unworkable. The result will be more midsize buildings being built than towering skyscrapers. And that's not necessarily a bad thing. Any incentive to spur more housing is being welcomed in New York City, where rents have reached yet another record high.

19:53But the real estate industry says this 100 unit or more tax will ultimately limit the number of new units that are put on the market. So Toby, if someone looks at a construction site and asks you, I wonder how many units this will be. You can't go wrong with guessing 99. This reminds me of the window tax. This was introduced in Britain back in the 17th century. It was meant to be a progressive wealth tax where homes with over 10 windows would be taxed more because more windows means you're wealthier. But what happened was landlords said, huh, 10 windows. What if I just bricked up this window to bring it down to nine?

20:27Then I get to pay less of a tax. So you start to see this kind of threshold fall off. The exact same thing is happening with apartment buildings right now. It also reminds me of something called the cobra effect, which was when the British government offered a bounty for dead cobras in India to reduce the population. But people started breeding cobras in order to earn the reward. So that's an example of perverse incentives. It is just fascinating how you make one policy and you just can't necessarily know how that's going to react down the line, how people are going to react to those incentives.

20:59So 99, it sounds like a song, 99 apartment units on the wall, but that's what we're about to see more of in New York City. If there is a theme for this episode is taxes shape behavior in many ways. And in this case, they're shaping the skyline of New York City. For my final number, this is extremely odd. There have been no, no hitters in Major League Baseball this year. None. There have been a few close calls, like the Dodgers' Yoshinobu Yamamoto being one out away last weekend versus the Orioles, but each team has gotten at least one hit in every game since the season began back in the spring.

21:35No-hitters are very rare. There have only been 326 of them in almost 250 ,000 MLB games. But maybe even rarer than no-hitters are no-no-hitters. The last season without a single no-hitter was 2005, and it's happened just five times since 1969. What makes this even more bizarre is that we are coming off a golden age of no hitters. According to the Wall Street Journal, there was an average of four no hitters a year from 2010 through last season. There were nine in 2021, a record going back to the 19th century, and even two in 2020 where there was a shortened season from COVID. That was a lot of double negatives, so hope you're still with me.

22:14Toby, is this no no hitters season just what statisticians call an outlier? It is an outlier, but there are a few possible reasons contributing to the lack of no hitters. Batters, batting averages are ticking up a little bit. They were 243 in 2022. They're up to 246 this year. More balls in play means more chances for a mistake. Also, shorter outings. This is probably one of the biggest factors behind it. A lot of pitchers are going five innings, going six innings, and then getting pulled by their managers. There have been 10 instances this season when a starter went five hitless innings, and And then their manager comes out and yanks them, which was not something that used to happen in the past.

22:53It used to be like, all right, my guy's dealing here. Let's let him let's let him cook a little bit. Let's let him try to chase that no hitter. Now people are saying like, hey, as long as the team wins, like I'm fine with being pulled right now. So but probably random chance has to play with it. I mean, Yamamoto being a single out away like that is a crazy thing. We have to mention, too, it's never happened before. But the Dodgers ended up losing that game. They have never been a team to have both a lead and a no-hitter through eight and two-thirds innings and end up losing that game. So that is just some random chance.

23:25That was the best game of the season. Incredible win by the Orioles. Now let's sprint to the Finnis with some final headlines. The revival in the IPO market rolled on yesterday as Klarna finally made its long-awaited public debut on the New York Stock Exchange. The Swedish buy-now-pay-later giant didn't exactly take off like a rocket ship like recent IPOs of Figma and Circle, but still shares rose about 15 % in its first day of trading, closing above its expected range and giving it a$17 billion valuation. Now that Klarna is a public company, it will look to expand its products beyond letting users pay for their burritos in installments into things like debit cards and loans for larger ticket items.