Oracle Reportedly Considering 30,000 Job Cuts to Fund AI Data Centre Expansion

Oracle is reportedly considering cutting between 20,000 and 30,000 jobs to fund its artificial intelligence (AI) data centre buildout. As per the report, several US banks have backed out of funding the company's ambitious plans to build AI data centres after raising questions about the company's ability to handle such a large-scale project. Interestingly, the company partnered with OpenAI, SoftBank, and others last year for The Stargate Project, which aimed to develop AI infrastructure in the US and globally.

Oracle Layoffs Could Reportedly Impact 30,000 Jobs

According to a report by CIO, the Texas-based cloud giant is planning to cut between 20,000 and 30,000 jobs as US banks retreat from its AI data centre expansion project. Citing data from investment bank TD Cowen, the report added that Oracle might be forced to sell some of its business units to fund the ongoing expansion.

The large-scale layoff could reportedly free up between $8 billion (roughly Rs. 73,245 crore) and $10 billion (roughly Rs. 91,560 crore) in cash flow. However, this is said not to be enough for the buildout, and the company might reportedly sell its healthcare software unit, Cerner, to acquire additional funds. Notably, Oracle acquired Cerner in 2022 for $28.3 billion (roughly Rs. 2.59 lakh crore).

As per the TD Cowen research data cited by CIO, multiple US banks have backed out from funding Oracle's data centre project. It is said that the investors have doubts about the company's ability to finance the build-out while ensuring sustainable business operations. Based on Oracle's current infrastructure commitments, of which The Stargate Project is a part, the company reportedly requires $156 billion (roughly Rs. 14.28 lakh crore) in capital expenditure.

The report claims that Oracle had raised significant funds from debt markets and is incapable of raising any further funds, which has led to the consideration of such drastic measures. Increased borrowing costs have reportedly stalled data centre lease deals that were under negotiation with private operators, which has emerged as another barrier for the company.

Oracle's ongoing struggles underscore the loosely forged deals in the AI space that experts have warned about. Whether it is the start of the AI bubble finally bursting will be revealed in due course of time.