Oracle Plans New Round of Layoffs to Cut Salary Expenses
Oracle is formulating a new round of layoffs to reduce salary expenses while accumulating billions in debt to fund AI infrastructure. The company has asked managers to submit lists of affected employees, aiming to complete salary reductions before the start of the second fiscal quarter on September 1.
Some teams may see layoffs reach double digits. Previously, in the fiscal year ending May 31, Oracle reduced its full-time positions by 21,000, a decrease of about 13%, bringing the total employee count down to approximately 141,000, with related restructuring costs of about $1.8 billion.
In fiscal year 2026, Oracle's capital expenditure on infrastructure reached $55.7 billion, with cash outflows exceeding generated amounts by $23.7 billion. The company raised $43 billion through debt and $5 billion through stock sales, and expects to raise about $40 billion more through debt and equity in the current fiscal year.
Oracle declined to comment on this matter. The company's SEC filings previously acknowledged that the deployment of AI technology has led to and may continue to lead to a reduction in the workforce, with layoffs primarily serving the transition to cloud and AI business.
From a market mechanism perspective, event-driven cost control will directly convert salary savings into capital expenditures for AI data centers, shifting funds from labor-intensive businesses to infrastructure. Beneficiaries include cloud and AI-related suppliers and debt financing channels, while traditional software and operational positions face pressure, with the overall capital structure leaning towards high-leverage infrastructure.
Source: Public Information
ABAB AI Insight
Under Larry Ellison's leadership, Oracle is shifting from database software to cloud and AI infrastructure, signing large-scale computing power agreements with OpenAI, Meta, and others in fiscal year 2026, doubling capital expenditures to $55.7 billion, while replacing internal positions with AI automation, resulting in 21,000 layoffs and $1.8 billion in restructuring costs.
In terms of capital pathways, the company supports data center expansion through debt and equity financing while continuously reducing labor costs, motivated by the need to quickly meet AI customer demands and maintain competitive positioning, strategically exchanging high leverage for market share, converting short-term cash flow pressures into long-term infrastructure assets.
Similar cases can be seen with Amazon and Meta conducting large-scale layoffs during their AI investment phases, as well as traditional software companies reallocating resources during their transitions to the cloud. Currently, Oracle is in a deep transformation phase from a software licensing model to capital-intensive cloud services.
The structural judgment indicates capital concentration: the AI infrastructure race forces companies to drive fixed capital formation through debt, while layoffs release operational leverage, with the mechanism being that computing power becomes a core scarce resource, and labor costs are prioritized for compression to support irreversible data center investments.
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