AI spending is too aggressive, severely draining cash flow. Oracle (ORCL.US) is reportedly planning to lay off thousands of employees to ease funding pressure.

Oracle (ORCL.US) is planning to lay off thousands of employees. The move is one of the steps it is taking to cope with tight cash flow caused by the massive expansion of AI data centers.

According to people familiar with the matter, the layoffs will affect multiple departments at the company and could be implemented as early as this month. Two of the people said that some positions are being cut because after the widespread adoption of AI technology, Oracle expects related demand to decline.

Under the leadership of founder and chairman Larry Ellison, Oracle is pushing forward with the largest data center construction in its history, providing AI computing power to customers such as OpenAI. The company, which has long been known for database software, has been accelerating its transition in recent years—expanding its cloud computing business and focusing on the AI sector—aiming to compete head-on with cloud business giants such as Amazon (AMZN.US) and Microsoft (MSFT.US).

According to compiled data, Wall Street expects that the company’s massive spending on data centers for its Oracle cloud business will turn its cash flow negative over the next several years, until related spending starts to generate returns in 2030. Last month, Oracle announced that it plans to raise up to $50 billion this year through methods such as debt issuance and stock sales.

People familiar with the matter said the scope of the planned layoffs will go far beyond the company’s usual gradual streamlining. Other reports say that Oracle has internally announced this week that it will re-evaluate a large number of roles being hired for its cloud business. In practice, this amounts to slowing down or pausing the hiring process.

Oracle declined to comment. As of the end of May 2025, Oracle has roughly 162k employees worldwide. The people said the layoff plan is still being developed and details may change.

Oracle’s early push as an AI cloud service provider once drew strong investor interest, and its stock surged 61% in 2024 and rose another 20% in 2025. But as costs kept climbing, market sentiment shifted toward pessimism: as of Thursday’s close, the stock was down 55% from its September 2025 high.

The high upfront investment in its AI business has triggered a wave of layoffs across the entire tech industry, with companies balancing budgets through headcount reductions. Microsoft (MSFT.US) last year cut about 15k employees after a surge in spending on data centers and AI software development; payments company Block (XYZ.US) also announced last week that it would lay off nearly half of its employees, and co-founder Jack Dorsey attributed the move to efficiency gains brought by AI.

In September last year, Oracle disclosed in a filing that it is planning the largest reorganization in its history. In the fiscal year ending in May of this year, related costs could total as much as $1.6 billion, including severance payments for laid-off employees—far exceeding any prior reorganization plan. Oracle is scheduled to release its 2026 fiscal third quarter earnings report next Tuesday in U.S. Eastern Time.