Oracle, led by Chairman Larry Ellison, is undertaking a massive data center construction project to support the computing needs of artificial intelligence customers, such as OpenAI. The company, known for its database software, has made significant efforts in recent years to strengthen its cloud services business, aiming to compete with market leaders Amazon and Microsoft.
Wall Street analysts anticipate that Oracle’s free cash flow will turn negative in the coming years due to the data center investments, according to Bloomberg data.
The investments are not expected to yield returns until around 2030.
The company announced last month it plans to raise up to $50 billion through bond and stock offerings this year to finance the expansion.
The planned layoffs will be far more extensive than Oracle’s typical, ongoing workforce reductions. The company indicated in an internal memo this week that it is reviewing open positions within its cloud services division, effectively implementing a hiring freeze. Some of the job cuts will affect roles the company anticipates will be less necessary with the proliferation of artificial intelligence. Oracle employed approximately 162,000 people worldwide as of May 31, 2025.
Investors initially reacted positively to Oracle’s ambitions in the artificial intelligence-focused cloud services market. The company’s stock rose 61 percent in 2024 and another 20 percent last year. However, sentiment shifted as costs began to rise. The stock price had fallen 54 percent from its September 2025 peak as of Wednesday’s close.
The high investment costs of artificial intelligence are already leading to layoffs across the technology sector. Microsoft cut roughly 15,000 jobs last year due to increased spending on data centers and AI development. Block announced plans last week to eliminate nearly half of its workforce. Oracle publicized its largest restructuring plan to date in September, which could cost up to $1.6 billion by the end of the fiscal year ending May 31.
The featured image is an illustration. Image source: Getty Images
This writing does not constitute investment advice or an investment recommendation. Detailed legal information
