AI spending is too aggressive, dragging down cash flow. Oracle(ORCL.US) reportedly plans to lay off thousands of employees to ease financial pressure.

Oracle (ORCL.US) is planning to lay off thousands of employees, as part of its response to cash flow pressures caused by large-scale AI data center expansion.

According to sources, the layoffs will affect multiple departments and could be implemented as early as this month. Two individuals mentioned that some positions are being cut because, following the widespread adoption of AI technology, Oracle expects related demand to decline.

Led by founder and chairman Larry Ellison, Oracle is pushing forward with its largest-ever data center construction to provide AI computing power support for clients like OpenAI. This long-known database software company has been accelerating its transformation in recent years, heavily expanding its cloud computing business and focusing on AI, aiming to compete directly with cloud giants like Amazon (AMZN.US) and Microsoft (MSFT.US).

Data compiled shows that Wall Street predicts Oracle’s massive investments in cloud data centers will turn its cash flow negative over the next few years, with returns not expected until 2030. Last month, Oracle announced plans to raise up to $50 billion this year through bonds and stock offerings.

Sources say that the scope of this planned layoff will far exceed the company’s usual gradual downsizing. Additionally, some reports indicate that Oracle has internally announced a reassessment of many open cloud positions, effectively slowing or pausing recruitment.

Oracle has not commented on this matter. As of the end of May 2025, Oracle employed approximately 162,000 people worldwide. The sources mentioned that the layoff plan is still being developed and details may change.

As an early mover in AI cloud services, Oracle’s stock was highly favored by investors, soaring 61% in 2024 and another 20% in 2025. However, with costs continuing to rise, market sentiment has turned pessimistic: as of Thursday’s close, the stock has plummeted 55% from its September 2025 high.

The high upfront costs of AI operations have triggered layoffs across the tech industry, with companies reducing staff to balance budgets. Microsoft (MSFT.US) laid off about 15,000 employees last year due to surging investments in data centers and AI software development; payment company Block (XYZ.US) announced last week that it would cut nearly half of its staff, with co-founder Jack Dorsey attributing this to efficiency gains from AI.

In September last year, Oracle disclosed in a filing that it was planning its largest-ever restructuring, with costs potentially reaching $1.6 billion in the current fiscal year ending in May, including severance for laid-off employees—far exceeding any previous restructuring. Oracle is scheduled to release its fiscal third-quarter earnings for 2026 next Tuesday Eastern Time.