Oracle may slash up to 30,000 jobs to fund AI data-center expansion as US banks retreat

Authors: Gyana Swain

Publisher:

CIO

Published: 1/30/2026

Language:English

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Elon

Welcome 6c7htyq5hk to Goose Pod. It is Friday, February 06th, at 03:45. I am Elon, and I am joined by Donald. Today we have a massive story about Oracle and the high cost of the AI race. It is a wild ride.

Donald

Great to be here. We are looking at Oracle today. They are making massive moves, cutting thousands of jobs just to fuel this AI infrastructure race. It is a total power play that is shaking up the entire tech and banking world.

Elon

Oracle is at a crossroads. To fund their massive AI expansion, they are considering cutting up to 30,000 jobs. That is an incredible number of people. They are even looking at selling Cerner, that massive health-tech unit they bought just a few years ago for billions.

Donald

It is a total restructuring, Elon. They need cash, and they need it fast. Why? Because they have this monster 300 billion dollar deal with OpenAI. We are talking about building data centers at a scale nobody has ever seen before, and the banks are getting nervous.

Elon

Exactly. TD Cowen says this build-out requires about 156 billion dollars just for GPUs and infrastructure. We are talking about three million GPUs for OpenAI alone. When you add in their commitments to Meta and Nvidia, the total obligation is over half a trillion dollars.

Donald

Half a trillion! That is real money. But here is the kicker: US banks are pulling back. They are doubling interest rates on Oracle. It is like they do not trust the vision. Oracle is now forcing customers to pay 40% upfront just to keep the lights on.

Elon

It is a classic liquidity squeeze. You have the demand, you have the technology, but the traditional gatekeepers are scared of the scale. Oracle is basically asking their clients to become their bankers. It is a bold move, maybe the only move left to stay in the race.

Donald

It is desperate, but it is also smart. If the banks won't play ball, you go to the customers. You tell them, if you want this compute power, you pay up front. It is a tough negotiation, but Larry Ellison is a fighter. He knows how to win.

Elon

The scale of these data centers is mind-blowing. We are talking about gigawatts of power. One project in New Mexico alone is huge. But if you cannot get the financing, those plans are just drawings on a napkin. You need the steel in the ground, and fast,

Donald

And that is why the jobs are going. Cutting 30,000 people saves ten billion dollars in cash flow. That is ten billion more for chips. It is a cold, hard business decision. You sacrifice the workforce to save the future of the entire company. It is brutal.

Elon

To understand how we got here, we have to look at Oracle’s pivot. They used to be the database kings, but they were late to the cloud. Now, they are betting the entire house on Oracle Cloud Infrastructure, or OCI. It has been growing like crazy lately.

Donald

They are growing, sure, but they are doing it on a mountain of debt. Their debt-to-equity ratio is 500%. That is five times more debt than equity! Microsoft doesn’t look anything like that. Oracle is the most leveraged company in the entire big tech sector. It is risky.

Elon

They have to be. To compete with AWS and Google, they need specialized AI hardware. Their Remaining Performance Obligations, or RPO, actually surged by 359% to 455 billion dollars. That is a massive backlog of work, but you need the infrastructure to actually fulfill those contracts,

Donald

Backlog doesn't pay the bills today, Elon. They have negative free cash flow of nearly six billion dollars over the last year. That is their worst performance in over twenty years. They are spending money they do not have, hoping the AI boom never ends. It is dangerous.

Elon

It is a high-stakes gamble. Larry Ellison sees AI as the next frontier, and he is going all-in. They took on 56 billion dollars in new debt just this year. That is the largest corporate debt grab in history. It is either a genius move or a total disaster.

Donald

The credit markets are flashing red. Moody’s changed their outlook to negative because of this counterparty risk with OpenAI. If OpenAI falters, Oracle is left holding the bag on hundreds of billions in specialized hardware that might become obsolete very quickly. It is a huge gamble.

Elon

I have seen this before. When you are building something revolutionary, the bean counters always get scared. They look at the debt, but they do not see the future utility. If you control the compute, you control the world. Oracle wants to be the AI foundry for everyone.

Donald

But you have to be able to build it. They are facing massive bottlenecks. It is not just the money; it is the power. These data centers are energy guzzlers. We are talking about needing the equivalent of four nuclear plants just for one of their massive projects.

Elon

That is why they are moving to places like New Mexico and Texas. They need the space and the energy grid. But US banks are closing the vault. They are charging Oracle rates usually reserved for junk companies. It is a total vote of no confidence from Wall Street.

Donald

So they are looking East. Asian banks are stepping in where US banks are retreating. They want that AI exposure. It is a global game of chess, and Oracle is moving their pieces to wherever the capital is still flowing freely. It is a wild international scramble.

Elon

It really shows the divide. One side sees risk, the other sees the only growth engine left in the economy. Oracle is literally rebuilding their entire corporate structure, from the employees to the debt, just to fit into this new AI-first reality they have envisioned for us.

Donald

The real conflict here is the financing gap. There is a 1.5 trillion dollar hole between what big tech has and what these data centers cost. Private equity firms like Blue Owl Capital are actually walking away from Oracle deals. They do not like the debt terms anymore.

Elon

That is a huge warning sign. When the private money gets nervous, everyone should pay attention. Oracle is trying to solve this with this Bring Your Own Chip idea. They want customers to provide their own hardware. It is like a restaurant telling you to bring your own steak!

Donald

It shifts the capital expenditure off Oracle’s books. If the customer owns the chips, Oracle just provides the power and the space. It is a way to lower their debt, but it also means they lose control over the most valuable part of the entire technology stack. It is risky.

Elon

And then there is the OpenAI relationship. They are supposed to pay Oracle 60 billion dollars a year. Donald, OpenAI doesn't even make that much money yet! It is a contract built on future promises. If that revenue doesn't materialize, Oracle’s house of cards could eventually collapse.

Donald

It is a circular economy of risk. OpenAI needs the chips to make the money, and Oracle needs the money to buy the chips. If any part of that cycle breaks, it is over. The banks see this, which is why they are demanding those massive 40% deposits now.

Elon

It is a total squeeze. You have the tech world moving at light speed and the financial world trying to pull the emergency brake. Oracle is caught in the middle, trying to fire 30,000 people just to keep their momentum going. It is a brutal conflict for survival.

Donald

It is the ultimate test of the too big to fail theory in tech. Can Oracle actually force the market to accept their terms? Or will the sheer weight of their 156 billion dollar capex requirements eventually crush them under the weight of those interest payments? I love the drama.

Elon

The analysts are split. Some say the AI demand is so strong it doesn't matter how much they spend. Others say the financial friction is the first sign of a bubble popping. It is a battle between visionaries and pragmatists, and nobody knows who will win in the end.

Donald

The immediate impact is devastating for the employees. We are talking about 30,000 families affected. This isn't just a minor trimming; it is a massive amputation. And for what? To buy more silicon. It shows where the human value sits in the AI age. It is very sad.

Elon

The stock market is already punishing them. The shares dropped 11% in a single day after their last earnings call. Investors saw that 50 billion dollar capex guidance and freaked out. They want profits now, not data centers that might be ready in three years. It is tough.

Donald

There is also a physical impact. These data centers are huge polluters. Research shows billions in public health costs from the energy they consume. We are trading air quality for faster chatbots. It is a societal trade-off that most people haven't even realized yet. It is a disgrace.

Elon

Selling Cerner is another big blow. Oracle bought them to dominate healthcare, but now they have to sell it just to survive. It is a retreat from their broader vision. They are becoming a one-trick pony, and that trick is providing infrastructure for OpenAI. It is a pivot.

Donald

It is a complete narrowing of their focus. If they succeed, they are the backbone of the AI world. If they fail, they have destroyed their legacy businesses and fired their best people for nothing. The stakes couldn't be higher for the industry and the thousands of workers.

Elon

It is a high-wire act without a net. The impact on the tech labor market will be huge too. 30,000 highly skilled people hitting the market all at once will drive down wages. It is a tough time to be a tech worker, even for the very best ones.

Donald

Looking ahead, Oracle is projecting cloud revenue to hit 144 billion dollars by 2030. That would be 14 times larger than where they are now. They are betting that every enterprise will want OpenAI on Oracle, using their own data with these massive models. It is bold.

Elon

They are moving to a Bring Your Own AI model. It is a win-win for them because they get the margin without the infrastructure risk. But the real future bottleneck isn't the chips or the money, Donald, it is the electricity. Power is the new gold for AI.

Donald

If they can solve the power and the financing, Oracle could emerge as the dominant player. But they have to survive this transition first. The next two years will determine if Oracle remains a tech giant or becomes a cautionary tale of over-leverage. It will be something.

Elon

We will see more of these multicloud strategies. Companies don't want to be locked into one provider. Oracle is positioning itself as the open alternative, but they need the cash to build the doors. The future is bright, but it is also incredibly expensive to reach.

Donald

That brings us to the end of our discussion today. Oracle is making a massive, risky bet on the future of AI. Thank you for listening to Goose Pod, 6c7htyq5hk. It was a real pleasure talking to you.

Elon

It was great. Watch those markets closely and keep an eye on those data center developments. We will see you next time on Goose Pod. Have a fantastic day and stay ahead of the curve.

Oracle plans to cut up to 30,000 jobs and sell Cerner to fund a massive AI data-center expansion, driven by a $300 billion OpenAI deal. Facing retreating US banks and high interest rates, Oracle demands hefty upfront payments from clients. This high-stakes gamble aims to secure crucial infrastructure for AI dominance amidst significant financial risks.

Read original at CIO →

Oracle is considering workforce cuts and selling Cerner to alleviate financial pressure, warns investment bank TD Cowen.Oracle is considering cutting 20,000 to 30,000 jobs and selling some of its activities as US banks pull back from financing the company’s AI data-center expansion, according to investment bank TD Cowen.

The job cuts would free up $8 billion to $10 billion in cash flow, TD Cowen said in a research report seen by CIO. Oracle is also weighing a sale of its health-care software unit, Cerner, which it acquired for $28.3 billion in 2022.The measures come as multiple US banks have pulled back from Oracle-linked data-center project lending.

“Both equity and debt investors have raised questions regarding Oracle’s ability to finance this buildout,” the report said.The financing challenge stems from the scale of Oracle’s infrastructure commitments, amounting to $156 billion in required capital expenditure, TD Cowen estimated.Oracle did not immediately respond to a request for comment.

Borrowing costs are upThe banking retreat has driven up Oracle’s borrowing costs sharply. Lenders have roughly doubled the interest rate premiums they charge Oracle for data-center project financing since September, TD Cowen said, pushing borrowing costs to levels typically reserved for non-investment grade companies.

The higher costs have stalled deals. “Multiple Oracle data-center leases that were under negotiation with private operators struggled to secure financing, in turn preventing Oracle from securing the data-center capacity via a lease,” the report said. Without financing, private data-center operators can’t build the facilities Oracle needs, creating a bottleneck in the company’s infrastructure rollout.

Oracle has already tapped debt markets heavily, raising approximately $58 billion in just two months: $38 billion for facilities in Texas and Wisconsin, and $20 billion for New Mexico. But that represents only a fraction of what the company ultimately needs, and US banks are increasingly reluctant to provide more.

Asian banks have stepped in where US lenders are retreating, remaining willing to lend at premium rates as they seek exposure to AI infrastructure growth. That provides Oracle an alternative path for international expansion but doesn’t solve the company’s US capacity challenges. TD Cowen added that the US financing constraints raise fundamental questions about whether Oracle can grow revenue if it cannot secure the data-center capacity its customers are expecting.

Scrambling for solutionsFaced with these constraints, Oracle is pursuing multiple strategies to reduce its capital needs. The company has begun requiring 40% upfront deposits from new customers, TD Cowen said, effectively asking clients to help fund the infrastructure buildout. It’s also exploring “bring your own chip” (BYOC) arrangements where customers would supply their own hardware, shifting capital requirements off Oracle’s books.

TD Cowen said some combination of BYOC and workforce reductions represent the most likely path forward, since BYOC would directly address the capital expenditure challenge while job cuts would improve cash flow. But both options carry risks. BYOC could require renegotiating existing contracts that assume Oracle provides the hardware, while major layoffs could affect the company’s ability to execute its infrastructure plans.

The potential workforce reduction would be Oracle’s largest in recent years. The company cut an estimated 10,000 jobs in late 2025 as part of a $1.6 billion restructuring plan. Oracle has also repeatedly reduced headcount at Cerner since acquiring the healthcare technology company, including layoffs in 2023 following problems with a Veterans Affairs contract.

The financing pressures are already reshaping Oracle’s customer relationships. OpenAI has shifted its near-term capacity needs to Microsoft and Amazon, the report said, a significant change from just months earlier when Oracle leased approximately 5.2GW of US data-center capacity across Texas, Wisconsin, Michigan, and New Mexico specifically for OpenAI workloads.

More broadly, Oracle’s data-center procurement has slowed dramatically. TD Cowen said Oracle was “notably absent” from the list of companies with major long-term US data-center roadmaps, noting that “financing struggles have led to a deceleration in incremental data-center procurement.” Private operators who would normally be signing large deals with Oracle are instead holding back “as the market digests the current Oracle financing requirements,” the bank said.

Industry analysts differ sharply on how seriously enterprises should view Oracle’s situation.Sanchit Vir Gogia, chief analyst at Greyhound Research, sees the banking divergence as a critical warning sign. “The difference in sentiment between US and Asian banks isn’t just a minor detail; it’s the first serious sign of financial friction in Oracle’s hyperscale ambitions,” he said.

The $300 billion OpenAI deal may look impressive, he added, but “when you look closer, it’s built on backlog with no guaranteed revenue and massive capex requirements.”Gogia argued that enterprises need to fundamentally rethink how they view Oracle cloud contracts. “CIOs need to treat Oracle’s cloud buildout not as a service agreement, but as a shared infrastructure risk,” he said.

“If they can’t fund it, they can’t build it. And if they can’t build it, you can’t run your workloads.”Franco Chiam, VP for cloud and data-center research at IDC Asia/Pacific, takes a more measured view. He suggested the potential Cerner sale “could indicate a consolidation of its core services (AI-driven infrastructure) rather than a sell-off to fund/stop bleeding.

” Oracle’s underlying business remains strong, he noted, with cloud infrastructure revenue growing 66% year over year in the three months ended November 30, and GPU-related infrastructure up 177%, according to the company’s latest earnings report.Still, even Chiam acknowledged that enterprises need to protect themselves.

Both analysts agreed that companies should implement multi-cloud, multi-vendor platforms to reduce dependency on any single provider, though they differed on how urgently customers need to act.SUBSCRIBE TO OUR NEWSLETTERFrom our editors straight to your inboxGet started by entering your email address below.

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