Expansion costs for AI data centers surge, Oracle plans to lay off thousands to cut expenses.

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Oracle is planning to cut thousands of jobs, a move to address the cash pressure brought by large-scale expansion of AI data centers.

According to media reports citing informed sources, these layoffs will affect multiple departments of the company and may begin as early as this month. Some of the cuts will focus on job categories the company expects will see reduced demand due to AI development in the future. The planned scale of layoffs is expected to exceed the typical rolling layoffs previously seen at Oracle. This week, Oracle also announced internally that it will review a large number of unfilled job postings in its cloud division, which effectively means slowing down or even freezing hiring.

Oracle had about 162,000 employees worldwide as of the end of May 2025. The layoff plan is still being formulated, and the specifics may change.

Following the release of related reports, Oracle's shares on Thursday gave up early gains, at one point dropping 1.5% to $150.12.

Under the leadership of chairman Larry Ellison, Oracle is launching a historic data center construction plan to support AI computing needs for clients such as OpenAI. Oracle is long known for its database software, but in recent years has been pushing for transformation, focusing on cloud computing and AI, aiming to become a major competitor to industry leaders Amazon and Microsoft.

Wall Street expects that spending by the cloud division on data centers will drag Oracle's cash flow into negative territory in the coming years, until these investments are expected to start paying off around 2030. Last month, Oracle said it plans to raise up to $50 billion this year through debt and equity financing.

As an AI cloud service provider, Oracle's initial strategy was well received by investors, with shares rising 61% in 2024 and 20% last year. But as costs continue to climb, market sentiment has cooled: By Wednesday’s close, the stock had fallen 54% from its peak in September 2025.

The high upfront investments brought by AI are also pushing layoffs across the tech industry, as companies balance budgets. Microsoft cut about 15,000 jobs last year as spending on data centers and AI software development rose. Last week, Block announced nearly half its staff would be laid off, with co-founder Jack Dorsey saying one reason was efficiency improvements brought by AI.

In September last year, Oracle disclosed in a filing that the company is implementing the largest restructuring plan in its history, with costs for the current fiscal year ending in May expected to reach up to $1.6 billion, including severance pay for laid-off employees—a scale significantly higher than any similar plans previously revealed by the company.

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