Oracle is planning to cut thousands of jobs across multiple divisions as soon as this month as the company redirects resources toward expensive artificial intelligence data center projects, according to a report published Thursday.
Oracle Corp. is preparing to eliminate thousands of jobs companywide as part of a broader effort to shift resources toward artificial intelligence infrastructure, according to unnamed sources.
The cuts could begin as early as March and affect several divisions within the company. The reductions are expected to go beyond Oracle’s routine workforce adjustments, the report said.
The company has also told employees it is reviewing many open positions in its cloud division as part of the planning process. The company declined to comment on the report when contacted through a spokesperson.
Sources noted the plans remain under review and could still change.
The company employs more than 160,000 people globally, according to estimates cited by analysts. If implemented, the layoffs would represent one of the company’s larger workforce reductions in recent years.
Massive AI Infrastructure Spending Pressures Finances
The potential job cuts come as Oracle accelerates spending to expand its artificial intelligence data center network.
The company recently announced plans to raise about $50 billion this year through a mix of debt and equity financing to fund the buildout of AI-focused infrastructure. The investments are intended to meet surging demand for cloud computing and AI processing power.
That spending surge has raised concerns among investors about near-term profitability. Analysts expect Oracle to post negative free cash flow for at least the next three fiscal years as capital expenditures increase.
Oracle executives have defended the strategy, arguing that demand for AI computing capacity from startups and large enterprises continues to grow rapidly.
The company’s cloud infrastructure business has become a key part of its long-term growth strategy as competition intensifies among major technology firms investing heavily in artificial intelligence.
Stock Declines As Investors Weigh AI Costs
Oracle’s stock has faced pressure in recent months as investors evaluate the costs associated with the company’s AI expansion.
Shares reached a record high in September after Oracle reported that remaining performance obligations, a measure of future contracted revenue, surged 359% to $455 billion, driven largely by cloud demand.
Since then, the stock has fallen sharply as markets reacted to the scale of planned capital spending and questions about customer concentration in its cloud backlog.
One concern raised by analysts is the significant role of artificial intelligence developer OpenAI in Oracle’s cloud pipeline.
On Thursday, Oracle shares traded around $153.17, down more than 50% from their September peak.
Barclays analyst Raimo Lenschow said the reported layoffs would not be unexpected given the company’s strategic transition.
“Given Oracle’s transforming business and AI efficiencies, we see the move as unsurprising and not a major read-through for demand,” Lenschow wrote in a note to clients. He maintains an “overweight,” or buy, rating on the stock.
Oracle is scheduled to report fiscal third-quarter earnings Tuesday, when investors will be watching closely for updates on its AI investment strategy and financial outlook.
