Oracle Reportedly Planning To Cut Thousands Of Jobs

Oracle (ORCL) is reportedly planning to cut thousand of jobs as the tech giant dedicates resources toward a costly AI data center buildout. The company’s AI-related capital spending plans have weighed on Oracle stock for months.

The job cuts will affect “divisions across the company and may be implemented as soon as this month,” according to a report from Bloomberg Thursday afternoon. The report cited unnamed sources.

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The reductions at Oracle will go beyond typical rolling job cuts within the company, according to Bloomberg’s report. The company also told employees that it is reviewing many of the open job listings within its cloud division, per the Bloomberg report.

Bloomberg also noted that the company is still in the process of planning for the workforce reductions and that plans could change.

Through a spokesperson, Oracle declined to comment on the report.

Oracle stock soared to a record high in September after the company said massive demand for cloud infrastructure has pushed its remaining performance obligations 359% higher to $455 billion.

But the stock pulled back sharply since then. Investors are concerned about the huge costs to build data centers that meet Oracle’s cloud demand. Another concern is that OpenAI is responsible for a significant portion of Oracle’s cloud backlog.

On the stock market today, Oracle stock is ahead a fraction at 153.17. Shares are down more than 50% from September highs.

Oracle Stock: Earnings Due Soon

Barclays analyst Raimo Lenschow noted that the cuts would come from a base of more than 160,000 global jobs at Oracle.

“Given Oracle’s transforming business and AI efficiencies, we see the move as unsurprising and not a major read-through for demand,” Lenschow wrote to clients Thursday following Bloomberg’s report. Lenschow rates Oracle stock as overweight, or buy.

Oracle is scheduled to report fiscal third quarter results on Tuesday.

The job cuts report comes as Oracle is making a massive bet on AI infrastructure. The company last month detailed plans to raise $50 billion this year through a combination of debt and equity sales.

Analysts polled by FactSet project that Oracle will have negative free cash flow for at least the next three fiscal years, as it hikes capital expenditures to build data centers.

Oracle defends its spending plans by citing the major demand for AI computing power by startups and enterprises.

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