To raise funds for hundreds of billions in AI, Oracle has launched a new round of layoffs, with some teams cutting rates potentially reaching double digits!
The core driving force behind Oracle's layoffs is Oracle's aggressive bet on AI infrastructure. In fiscal year 2026, Oracle will invest $55.7 billion in infrastructure, mainly for building data centers and purchasing chips. That year, the company's cash expenses exceeded cash income by $23.7 billion. To fill the funding gap, Oracle has raised $43 billion in fiscal year 2026 through debt issuance and $5 billion by selling shares. The company expects to raise an additional approximately $40 billion in the current fiscal year through debt and equity financing. Even more worrying is the scale of debt. As of early August, Oracle's total debt had reached $129.5 billion, with an additional $260 billion in data center leasing commitments. Credit rating agencies have begun closely monitoring its financial condition.
This marks another round of large-scale layoffs by Oracle in fiscal year 2026. According to recent official documents submitted by the company, as of May 31, 2026, Oracle's total workforce has decreased by about 21,000, a decline of 13%, and currently has about 141,000 full-time employees worldwide. In its annual report, the company officially admitted for the first time that the application of AI was one of the reasons for the layoffs.
This restructuring was costly, with Oracle paying $1.84 billion in severance and other severance-related costs in fiscal year 2026, far exceeding the $374 million in the previous year. Notably, this layoff nearly erases the employee growth brought by Oracle's $28 billion acquisition of Cerner in 2022.
The latest round of layoffs indicates that Oracle's cost-cutting efforts are far from over. TD Cowen's estimate is more aggressive, suggesting that the number of executives could reach 20,000 to 30,000, about 18% of Oracle's global 162,000 employees, potentially generating $8 to $10 billion in cash flow.
Although Oracle's cloud infrastructure business grew 77% in the last fiscal year and total revenue increased by 17%, massive capital expenditures are intensifying market concerns. Insiders revealed that another background to this round of layoffs is that several U.S. banks have begun withdrawing financing from Oracle AI infrastructure projects. If bank financing channels tighten further, Oracle may face even more severe financial pressure.
Oracle's financial pressure comes not only from capital expenditures but is also closely tied to its massive commitment to OpenAI. According to reports, Oracle signed an AI infrastructure agreement worth about $300 billion with OpenAI, putting enormous pressure on the company's balance sheet.
Market Insight:
Since the beginning of this year, Oracle's stock price has dropped nearly 26% cumulatively. This reflects both Wall Street's widespread caution over the soaring AI infrastructure costs in the tech industry and investors' concerns that AI may replace traditional software products.
