Oracle lays off thousands; AI data center expansion triggers cash flow crisis

甲骨道 is using layoffs to create room, paying the price for its big bet on AI data centers. According to Bloomberg’s report on Friday, Oracle is planning to lay off thousands of employees company-wide, with implementation as soon as this month. The scale of this round of layoffs is expected to exceed the company’s usual rolling reductions, and some positions will be directly eliminated due to AI replacement. Following the news, Oracle’s share price fell as much as 1.5% that day. Behind the layoffs is mounting cash flow pressure. Wall Street analysts predict that capital expenditures for Oracle’s cloud division’s data centers will keep the company’s cash flow negative through this decade, with returns not expected until 2030. To address this, Oracle announced last month that it would raise up to $50 billion this year through issuing debt and equity. Meanwhile, the company’s credit default swap (CDS) spreads have widened to their highest level since the 2008 financial crisis. Layoffs affect the entire company, with AI accelerating job losses According to sources, this round of layoffs will cover multiple business units within Oracle, with some cuts specifically targeting positions expected to be reduced due to decreased demand from AI. This week, Oracle also internally announced it would review a large number of vacancies in its cloud division, virtually slowing or freezing its hiring process. As of the end of May 2025, Oracle had approximately 162,000 employees worldwide. The specific number of layoffs has not yet been disclosed, and insiders say the plan is still ongoing and subject to change. This is not Oracle’s first major reduction in labor costs. In September last year, Oracle disclosed its largest restructuring plan in history in regulatory filings, anticipating up to $1.6 billion in restructuring costs through the current fiscal year ending this May. This includes severance pay for departing employees, far exceeding prior similar plans. The company is scheduled to announce its Q3 earnings next Tuesday. The high price of the data center gamble: stock price halved from peak Under chairman Larry Ellison’s leadership, Oracle is making a big push to build data centers to provide AI computing power for customers like OpenAI, aiming to compete head-to-head with Amazon and Microsoft in the cloud market. This strategic shift once won investor favor—Oracle’s share price rose 61% in 2024 and another 20% in 2025. However, as costs continue to soar, market sentiment has turned sharply negative. From its peak in September 2025 to Wednesday’s close, Oracle’s share price has plummeted by 54%. Bloomberg data show that Wall Street expects spending on data centers in its cloud division to drag down the company’s cash flow for years to come. The surging upfront investment in AI is triggering ripple effects across the entire tech sector. Last year, Microsoft laid off about 15,000 employees due to rising spending on data centers and AI software development; last week, Block announced it would cut nearly half its workforce, and co-founder Jack Dorsey attributed this to AI-driven efficiency gains. Oracle’s current layoffs are the latest footnote in this industry-wide wave of cost restructuring. Risk disclosure and disclaimer The market is risky, and investment needs caution. This article does not constitute personal investment advice, nor does it take into account any user’s particular investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their circumstances. Investing based on this information is at your own risk.