“Free up money” for 100 billion AI gambling! Rumor has it that Oracle (ORCL.US) has launched a new round of layoffs: some teams may be cut in double digits

Zhitong Finance App learned that according to internal documents and several people familiar with the matter, Oracle (ORCL.US) is preparing a new round of layoffs to reduce employee costs. The layoffs for some teams may reach double-digit percentages. The company has asked management to submit a list of affected employees, with the goal of completing cost reduction before the second fiscal quarter begins on September 1.

AI infrastructure “devours money”: $55.7 billion invested, cash gap of 23.7 billion dollars

The core driving force behind the layoffs is Oracle's wild bet on AI infrastructure. In fiscal year 2026, Oracle invested $55.7 billion in infrastructure, mainly to build data centers and procure chips. This year, the company's cash expenses exceeded cash revenue by $23.7 billion. To fill the funding gap, Oracle raised $43 billion by issuing debt and raised $5 billion by selling shares in the 2026 fiscal year. The company expects to raise an additional $40 billion in the current fiscal year through debt and stock financing.

What is even more worrying is the size of the debt. As of early August, Oracle's total debt had reached $129.5 billion, with an additional $260 billion in data center lease commitments. Credit rating agencies have begun to keep a close eye on their finances.

21,000 employees have been laid off in fiscal year 2026: $1.8 billion in severance payments. For the first time, AI was officially listed as the reason for layoffs

This is yet another round of large-scale layoffs at Oracle in fiscal year 2026. According to official documents recently submitted by the company, in the 2026 fiscal year ending May 31, 2026, the total number of Oracle employees has been reduced by about 21,000, a decrease of 13%. Currently, there are about 141,000 full-time employees worldwide. The company officially acknowledged for the first time in its annual report that the application of AI is one of the reasons for job cuts.

Oracle clearly states in the document: “The adoption and deployment of AI technology in the company's operations has led and may continue to reduce the number of employees. ” This is one of the clearest statements from big tech companies, acknowledging that automation is replacing the workforce.

The restructuring was costly: Oracle paid $1.84 billion in severance pay and other separation-related costs in fiscal year 2026, far higher than the previous fiscal year of $374 million. Notably, this layoff almost erased the employee growth brought about by Oracle's $28 billion acquisition of Cerner in 2022.

Layoffs continue: some teams may be cut by double digits

A new round of layoffs shows that Oracle's cost cuts are far from over. According to reports, layoffs in some teams may reach double-digit percentages. TD Cowen's estimate is more aggressive, believing that the number of presidents may reach 20,000 to 30,000, accounting for about 18% of Oracle's 162,000 employees worldwide, and is expected to release $8 billion to $10 billion in cash flow.

According to affected employees on social media, teams such as Revenue and Health Sciences (RHS) and SaaS and Virtual Operations Services (SVOS) have laid off at least 30% of their employees. The layoff notice was sent by email, which read: “After careful consideration of Oracle's current business needs, we have decided to cancel your position... Today is your last day of work”.

Stock prices fell 26% during the year, and Wall Street is increasingly wary of AI's “money-burning” model

Although Oracle's cloud infrastructure business grew 77% and total revenue increased 17% in the previous fiscal year, huge capital expenses are exacerbating market concerns.

GuruFocus's valuation model shows that Oracle's current market sales rate is 6.3 times higher than the historical median 5.4 times, reflecting the market's pricing for AI-driven growth. However, the company's free cash flow yield is -5.65%, and the free cash flow profit margin is -35.16%. The traditional price-earnings ratio valuation has lost its reference significance. GuruFocus estimates that Oracle's intrinsic value is approximately $190.26 per share, implying about 23.5% upside compared to the current price of $145.48.

Furthermore, people familiar with the matter revealed that another reason behind this round of layoffs is that several US banks have begun to withdraw financing for Oracle's AI infrastructure projects. If bank financing channels are further tightened, Oracle may face more severe financial pressure.

Since this year, Oracle's stock price has dropped nearly 26% cumulatively. This not only reflects Wall Street's general alarm about the technology industry's soaring AI infrastructure costs, but also reflects investors' concerns that AI may replace traditional software products. Barclays analysts pointed out that layoffs will help improve cash flow to support AI infrastructure and maintain Oracle's “gain” rating.

Massive debt and the shadow of OpenAI's “$300 billion promise”

Oracle's financial pressure is not only due to capital expenses, but is also closely linked to its huge commitment to OpenAI. According to reports, Oracle and OpenAI have signed an AI infrastructure agreement worth about 300 billion US dollars, which has put tremendous pressure on the company's balance sheet.

Over the past two months, Oracle has added $58 billion in debt. A number of US banks have quietly withdrawn funding support for their data center projects. The company's free cash flow has turned negative from around $11.8 billion in 2024 and is expected to reach $23 billion in 2026. As of May 31, 2026, Oracle also has $129.5 billion in property, plant and equipment, and $260 billion in data center lease commitments.

Industry microcosm: “cost trade-off” under the AI infrastructure boom

Oracle's large-scale layoffs are a typical example of the epitome of the industry under the AI infrastructure boom: even the companies that have benefited the most from the surge in AI demand are facing tremendous pressure on how to balance huge capital expenditure with Wall Street's requirements for profitability.

In the context of major technology companies investing in data centers, chips, and AI processes, Oracle chose a combination strategy of debt expansion+layoffs and savings. The company expects a net capital expenditure of approximately $70 billion for the current fiscal year.

Morgan Stanley previously said that as AI capital spending continues to expand, similar “cost trade-offs” will be played out among more technology companies. Oracle Chairman Larry Ellison tried to tone down concerns during the March earnings call, saying that the so-called “end of software” (SaaSPocalypse) would become a problem for other software companies, but it would not affect Oracle. However, the reality that the stock price fell 26% during the year, free cash flow turned negative sharply, and a new round of layoffs is putting a question mark on the market.