Oracle is reportedly considering cutting between 20,000 and 30,000 jobs globally. This move aims to free up significant cash to fund the company's ambitious artificial intelligence (AI) data center expansion plans. The potential layoffs, which represent up to 18.5% of Oracle's 162,000-strong global workforce as of May 2025, come amid increasing financial pressure and investor concerns over the high cost of building AI infrastructure^[1][2]. ### Mounting AI Infrastructure Costs Drive Concerns Investment bank TD Cowen analysts first flagged the potential job cuts. They reported Oracle could also sell its health tech unit, Cerner, to help ease financing challenges for its AI data centers^[1][3]. These challenges are largely driven by a massive $300 billion deal to supply cloud infrastructure to OpenAI, announced in September last year^[1]. TD Cowen estimates this OpenAI deal alone could require $156 billion in capital spending over five years. This includes acquiring around 3 million graphics processing units (GPUs) and other IT equipment^[1][4]. Oracle's capital expenditure has risen sharply in recent years as it invests heavily in AI. The company's capital spending reached $21.25 billion in fiscal year 2025, up from $6.86 billion in fiscal year 2024^[5]. This aggressive push into AI-driven data centers is at the heart of the current financial pressure^[2]. ### Funding Challenges and Investor Scrutiny US banks are reportedly stepping back from financing Oracle-linked data center projects^[2][3]. This retreat by lenders has led to rising borrowing costs for Oracle. TD Cowen noted that interest rate premiums on Oracle debt have roughly doubled since September^[6][7]. Higher costs have stalled negotiations with private data center operators. This prevents Oracle from securing the capacity it needs for its customers, including OpenAI^[2][7]. Both equity and debt investors have questioned Oracle's ability to finance this large-scale build-out^[1][2]. The company's credit default swaps (CDS), a measure of default risk, hit their highest level since the 2008 financial crisis recently^[8]. Oracle has taken on substantial debt, racking up $58 billion in just two months for data centers in Texas, Wisconsin, and New Mexico. The company's total debt now exceeds $100 billion^[6]. Since peaking in September 2025, Oracle's market capitalization has been cut in half, wiping out approximately $463 billion^[6]. A bondholder lawsuit was filed in January, claiming Oracle concealed its plans to take on more debt after an $18 billion bond offering in September 2025^[8][9]. This legal challenge adds to the scrutiny surrounding Oracle's AI financing disclosures^[8]. ### Potential Workforce Reduction and Asset Divestment The proposed job cuts of 20,000 to 30,000 employees could free up an estimated $8 billion to $10 billion in cash flow^[2][3][6]. This would be Oracle's largest workforce reduction in recent years^[2][3]. Employees linked to data centers and non-core units are likely to be most at risk^[3]. Oracle had already cut an estimated 10,000 roles in late 2025 as part of a $1.6 billion restructuring program^[2][3]. Its Cerner healthcare software unit, acquired in 2022, has also seen repeated layoffs^[2][9]. The potential sale of Cerner would further reduce spending pressure^[3]. TD Cowen analysts predict these actions are aimed at improving Oracle's financial health^[1]. The company's traditional software business has gross margins around 77%, but the infrastructure business has lower margins. Analysts polled by FactSet project gross margins could fall to about 49% by 2030 due to the high costs of AI GPUs^[5][10]. ### Oracle's Response and Future Outlook Oracle has not publicly commented on the reported job cuts or the potential sale of Cerner^[2]. However, the company publicly defended its partnership with OpenAI. Oracle stated that the stalled Nvidia-OpenAI investment deal has "zero impact" on its financial relationship with Sam Altman's company^[6]. Oracle posted on X through its official account, saying it remains "highly confident in OpenAI's ability to raise funds and meet its commitments"^[6]. This statement, however, did not reassure investors, and Oracle's stock slid by 2.79%^[6]. To address the cash crunch, Oracle has reportedly begun charging new customers up to 40% of contract value upfront^[3][7]. It is also exploring a "bring your own chip" model, where customers would supply their own hardware^[3][7]. The funding squeeze is already reshaping customer relationships. TD Cowen noted that OpenAI has shifted some near-term capacity needs to Microsoft and Amazon, reducing its reliance on Oracle's infrastructure^[2][7]. Oracle expects to raise $45 billion to $50 billion in 2026 through a combination of debt and equity financing to build additional cloud infrastructure capacity^[8][4]. This is to meet contracted demand from major customers like AMD, Meta, Nvidia, OpenAI, TikTok, and xAI^[4]. The company's aggressive AI strategy carries risks, with analysts projecting it will burn through roughly $34 billion in free cash flow over the next five years before turning positive in 2029^[10].

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