In what could be the largest workforce reduction in its history, Oracle is reportedly weighing a massive layoff of 20,000 to 30,000 employees.
The news, which broke on February 2, 2026, stems from a research note by investment bank TD Cowen. The reports suggest Oracle is scrambling to free up cash as the financial burden of its aggressive AI infrastructure expansion—specifically its partnership with OpenAI—reaches a breaking point.
1. The $156 Billion “AI Bill”
The primary catalyst for these drastic cuts is the staggering cost of building out the hardware required for modern artificial intelligence.
- OpenAI Commitment: Oracle has a multi-year, $300 billion agreement with Sam Altman’s OpenAI. TD Cowen estimates that fulfilling just the initial phases will require $156 billion in capital spending.
- GPU Hunger: The expansion involves procuring and cooling roughly 3 million high-end GPUs (like NVIDIA’s H100s and Blackwell chips).
- Cash Flow Gap: Cutting 30,000 jobs would reportedly free up $8 billion to $10 billion in annual free cash flow—liquidity the company needs to continue building its “Zettascale” clusters.
2. US Banks Retreat, Asian Lenders Step In
Oracle’s financial strain has reportedly led to a “financing crunch” in the United States.
- Lender Caution: Several major US banks have reportedly pulled back from lending on Oracle-linked data center projects, concerned by the company’s rising debt, which has surged past $100 billion.
- Interest Rate Surge: The cost of insuring Oracle’s debt (Credit Default Swaps) has tripled, with lenders roughly doubling the interest rate premiums they charge the company since late 2025.
- Stalled Leases: Negotiations for multiple data center leases with private operators have reportedly stalled because the operators themselves cannot secure the financing to build for Oracle.
- Asian Pivot: In response, Oracle is reportedly seeking alternative funding from Asian banks (Japan and Singapore), though often at premium “high-risk” rates.
3. Drastic Measures: Cerner Sale & Customer Deposits
The layoffs are only one part of a broader “liquidity rescue plan” being explored by CEO Safra Catz and Chairman Larry Ellison:
- Selling Cerner: Oracle is reportedly considering selling its healthcare software giant, Cerner, which it acquired for $28.3 billion in 2022. This would be a massive strategic pivot, effectively sacrificing its healthcare ambitions to feed the AI infrastructure “beast.”
- 40% Upfront Deposits: To pull cash forward, Oracle has begun requiring new customers to pay up to 40% of their contract value upfront to co-fund the infrastructure they will eventually use.
- “Bring Your Own Chip” (BYOC): Oracle is testing a model where customers supply their own hardware, and Oracle provides only the facility, cooling, and network.
4. The “OpenAI Risk”
Investors are growing increasingly wary of Oracle’s deep dependency on a single, non-profitable client.
- Shifting Workloads: TD Cowen noted that OpenAI has already begun shifting some near-term capacity needs back to Microsoft and Amazon, signaling concerns about Oracle’s ability to deliver its massive campuses on schedule.
- Stock Price Pressure: Oracle’s stock has faced significant volatility as analysts debate whether the company can maintain its investment-grade credit rating while spending $50 billion annually on Capex.
Conclusion: A High-Stakes Gamble
Oracle’s potential 30,000-person layoff marks the end of the “traditional software” era for the company. It is now effectively an AI infrastructure firm that also sells software. If these job cuts and asset sales allow it to complete its “Superclusters,” Oracle could become the backbone of the AI world. If the financing continues to dry up, it risks being left with a mountain of debt and a depleted workforce.
