Transferring funds for a massive AI bet worth tens of billions! Oracle (ORCL.US) reportedly initiates a new round of layoffs: some teams may face double-digit percentage cuts

According to The Smart Finance APP, internal documents and multiple sources reveal that Oracle (ORCL.US) is formulating a new round of layoffs to reduce employee costs. Some teams may see double-digit percentage cuts, and the company has asked managers to submit lists of affected employees, aiming to complete cost reductions before the start of the second fiscal quarter on September 1.

AI Infrastructure "Cash Burner": $55.7 Billion Invested, $23.7 Billion Cash Gap

The core driver behind the layoffs is Oracle's aggressive bet on AI infrastructure. In fiscal year 2026, Oracle invested $55.7 billion in infrastructure, mainly for building data centers and procuring chips. That year, the company’s cash expenditures exceeded cash income by $23.7 billion. To fill the funding gap, Oracle has raised $43 billion through debt financing and another $5 billion by selling shares in fiscal 2026. The company expects to raise about another $40 billion in the current fiscal year through further debt and equity financing.

Of greater concern is Oracle's debt size. As of early August, the company's total debt had reached $129.5 billion, with an additional $260 billion in data center leasing commitments. Credit rating agencies have started closely monitoring its financial status.

21,000 Jobs Cut in Fiscal 2026: $1.8 Billion in Severance, AI Cited as Official Reason for the First Time

This marks another round of large-scale layoffs for Oracle in fiscal 2026. According to recently submitted official documents, as of May 31, 2026, Oracle has reduced its workforce by about 21,000 employees in fiscal 2026—a 13% reduction—leaving roughly 141,000 full-time employees worldwide. For the first time in its annual report, the company officially acknowledged that AI applications are one reason for job cuts.

Oracle clearly stated in its filing: "The adoption and deployment of AI technologies in company operations have, and may continue to, result in a reduction in headcount." This is one of the most explicit acknowledgments among large tech companies that automation is replacing labor.

This restructuring comes at a high price: in fiscal 2026, Oracle paid $1.84 billion in severance and other related expenses, significantly more than the $374 million spent in the previous fiscal year. Notably, these layoffs have almost erased the headcount growth gained from Oracle's $28 billion acquisition of Cerner in 2022.

Layoffs Continue: Some Teams May Face Additional Double-Digit Cuts

The new round of layoffs indicates Oracle's cost reduction efforts are far from over. Reports suggest some teams may be cut by double-digit percentages. TD Cowen estimates even suggest a bolder scenario, projecting total layoffs could reach 20,000–30,000 employees, about 18% of Oracle's global workforce of 162,000, potentially releasing $8–10 billion in cash flow.

According to disclosures by affected employees on social media, teams such as Revenue and Health Sciences (RHS) and SaaS and Virtual Operations Services (SVOS) have cut at least 30% of staff. Layoff notices were delivered via email, which stated: "After careful consideration of Oracle's current business needs, we have decided to eliminate your position... Today is your last working day."

Shares Down 26% YTD, Wall Street Increasingly Wary of AI "Burn Rate"

While Oracle's cloud infrastructure business grew 77% in the last fiscal year with total revenue up 17%, huge capital expenditures are raising market concerns.

GuruFocus valuation models show Oracle’s current P/S ratio at 6.3—above the historical median of 5.4—reflecting the market's pricing for AI-driven growth. However, the company's free cash flow yield sits at -5.65%, and free cash flow margin at -35.16%, meaning traditional P/E valuation metrics are no longer meaningful. GuruFocus estimates Oracle’s intrinsic value at about $190.26 per share, about 23.5% higher than the current price of $145.48.

Additionally, insiders reported another background for this round of layoffs: several U.S. banks have started withdrawing financing for Oracle’s AI infrastructure projects. If bank financing channels tighten further, Oracle may face even greater funding pressure.

So far this year, Oracle’s share price has fallen by nearly 26%. This reflects both Wall Street’s general caution regarding the rapidly growing cost of AI infrastructure in the tech sector and investors’ fears that AI could replace traditional software products. Barclays analysts noted that layoffs help improve cash flow to support AI infrastructure and maintain an “Overweight” rating for Oracle.

Huge Debt and the Shadow of the $300 Billion OpenAI "Commitment"

Oracle’s financial pressures stem not only from capital expenditures but are closely tied to its massive commitment to OpenAI. Oracle reportedly signed a $300 billion AI infrastructure agreement with OpenAI, placing huge pressure on its balance sheet.

In the past two months, Oracle has added $58 billion in new debt. Several U.S. banks have quietly withdrawn financing support for its data center projects. The company’s free cash flow has turned from about $11.8 billion in 2024 to negative, and is expected to reach -$23 billion in 2026. As of May 31, 2026, Oracle still held $129.5 billion in property, plant and equipment, and $260 billion in data center leasing commitments.

Industry Snapshot: “Cost Trade-off” in the AI Infrastructure Frenzy

Oracle's large-scale layoffs are a typical snapshot of the industry under the AI infrastructure boom: even those companies benefiting most from surging AI demand now face immense pressure to balance massive capital expenditures with Wall Street’s profitability expectations.

With major tech firms all investing heavily in data centers, chips, and AI process integration, Oracle has adopted a combination strategy of expansion-to-debt and layoffs to cut costs. The company expects net capital expenditures of around $70 billion for this fiscal year.

Morgan Stanley previously stated that as AI capital expenditures continue to expand, similar “cost trade-offs” will unfold across more tech companies. Oracle chairman Larry Ellison sought to downplay concerns during the March earnings call, saying the so-called “SaaSpocalypse” would be other software companies’ problem, not Oracle’s. However, a 26% stock price decline for the year, a sharp turn to negative free cash flow, and ongoing rounds of layoffs are now casting doubt on that assertion among market watchers.