Oracle Corp. (NYSE: ORCL) is reportedly planning another round of job cuts as it seeks to rein in costs amid its heavy spending on AI infrastructure and rising debt. The job reductions could reportedly reach double-digit percentages in some teams. The tech giant has asked managers to compile lists of potentially impacted employees to trim the payroll by the start of the second quarter on September 1, reported Business Insider on Wednesday, citing an internal document and other sources.
The move is a strategic step to alleviate the financial burden caused by the company's heavy investment in AI infrastructure, which has resulted in billions in debt.
Oracle did not immediately respond to Benzinga's request for comments.
AI Costs Drive Oracle Job Cuts
Oracle's job cuts come in the wake of its massive AI buildout costs. The company announced plans to raise $50 billion in debt and equity in January, and its free cash flow in the last fiscal year was a negative $23.7 billion. Capital expenditure also surged 162% to $55.7 billion for the period.
The company revealed in its annual filing that it slashed about 21,000 jobs, or 13% of its workforce, over the past year as it accelerated AI adoption and broader restructuring. Its workforce fell from 162,000 to 141,000 by May 2026. The company spent $1.8 billion on restructuring costs, including severance and exit expenses, up sharply from $374 million a year earlier.
Oracle is not alone in this predicament. Other tech giants have also been slashing their workforce to offset the enormous capital expenditure on AI infrastructure. For instance, Meta Platforms Inc. (NASDAQ: META) laid off 8,000 employees, roughly 10% of its workforce, in May, and Microsoft Corp. (NASDAQ: MSFT) offered voluntary buyouts to 7% of its U.S. employees in April.
Oracle Targets FY2029 Cash Flow
Despite the financial strain, Oracle remains optimistic about its position in the AI infrastructure market. BNP Paribas analyst Stefan Slowinski stated that Oracle is well positioned in a supplier-friendly AI infrastructure market, with attractive contract economics and a potential free-cash-flow inflection beginning in fiscal 2029.
Oracle plans to raise $40 billion in fiscal 2027, including $20 billion through an equity ATM program and another $20 billion through yet-to-be-determined debt, equity, or a combination. The analyst said Oracle's nearly $90 billion in financing across FY2026-FY2027 could fund its current investment cycle until the business becomes cash-generative and self-sustaining from FY2029 onward.
ORCL Price Action: On a year-to-date basis, the stock declined 21.68%, as per Benzinga Pro. On Wednesday, ORCL ended 5.36% higher at $153.28.