Oracle could cut thousands of jobs - AI spending raises financing concerns

Company is considering up to 30,000 cuts, research claims

Oracle could cut as many as 30,000 jobs and sell off major assets as it grapples with the ongoing cost of expanding its AI infrastructure, according to an investment banking report.

Research published by TD Cowen suggests Big Red is weighing significant money-saving measures, including potential layoffs of between 20,000 and 30,000 staff, to help fund the construction of new datacentres linked to its large AI contracts.

The research note says investors are increasingly concerned about how Oracle will finance its rapid build-out, particularly following a $300bn, five-year agreement to supply computing power to OpenAI.

Oracle has been under close scrutiny since it issued $18bn in bonds in September, one of the largest technology debt sales ever.

The move helped finance its expanding cloud and AI operations, but also triggered questions about the company's longer-term borrowing needs.

Those concerns intensified after Oracle reported quarterly revenues of $16.06bn in December, slightly below analysts' expectations.

TD Cowen estimates the OpenAI contract alone could require capital spending of around $156bn, including the deployment of roughly 3 million high-end graphics processing units.

Investors were also alarmed by the scale of Oracle’s commitment when the company raised its projected capital expenditure for 2026 to $50bn last year.

Notably Blue Owl Capital, which has backed some of Oracle's largest datacentre projects, declined to support a proposed $10 billion facility in Michigan last year.

The cost of insuring Oracle's debt against default has risen sharply since December, a sign markets see greater financial risk.

The report claims that US banks have pulled back from financing Oracle-linked datacentre projects, while private developers leasing facilities to the company are finding it harder to secure funding.

By contrast, lenders in parts of Asia are said to be more comfortable with Oracle's risk profile.

TD Cowen adds that Oracle has begun requiring some customers to make deposits of up to 40% upfront, though it believes large AI clients may be exempt.

Oracle is apparently evaluating several options to address the pressure, including selling assets. Among them is Cerner, the healthcare technology firm it bought for $28.3bn in 2022.

Cutting staff could free up between $8bn and $10bn in cash flow, according to the report. Vendor financing is also being considered.

Oracle has not commented publicly on the claims. Earlier this month, it was sued by bondholders who allege the company failed to disclose the scale of debt needed to support its AI expansion.

The firm has previously denied reports of delays at its OpenAI datacentres.

Despite concerns about Oracle's finances, TD Cowen paints a broadly positive picture for the wider datacentre industry.

Global leasing reached a record 16.4 gigawatts in 2025, driven by surging demand for AI computing power.

A total of 5.1GW of datacentre capacity was leased in the final quarter of 2025, following 7.4GW in the third quarter, 2.0GW in the second and 1.9GW in the first, bringing annual leasing to a record 16.4GW.

That demand is pushing up construction costs, skilled labour wages and equipment prices – trends the bank says are likely to benefit established datacentre operators and suppliers in the coming years.