Oracle Contemplates Historic Workforce Reduction Amid OpenAI Partnership Pressures
Technology giant Oracle is reportedly considering its most significant workforce reduction ever, with plans to cut between 20,000 and 30,000 jobs. This dramatic move comes as the company grapples with the immense financial burden of its $300 billion partnership with OpenAI, which has proven substantially more costly than initially anticipated.
Financial Strain from OpenAI Commitment
According to investment bank TD Cowen's recent analysis, Oracle's commitment to OpenAI alone requires approximately $156 billion in capital spending and roughly 3 million GPUs to support the infrastructure. The company has already accumulated staggering debt, burning through $58 billion in just two months—$38 billion for data centers in Texas and Wisconsin, and $20 billion for a campus in New Mexico. Oracle's total debt now exceeds $100 billion, creating significant financial pressure.
The proposed workforce reduction would generate an estimated $8 to $10 billion in cash flow, funds that Oracle desperately needs to finance its expanding network of AI data centers primarily built to serve Sam Altman's OpenAI. Since reaching its peak in September 2025, Oracle's stock has lost more than half its value, wiping out approximately $463 billion in market capitalization.
US Banking Sector Retreat Compounds Challenges
The financing situation has grown increasingly precarious as multiple US banks have quietly withdrawn from lending on Oracle-linked data center projects. TD Cowen's report indicates that lenders have approximately doubled the interest rate premiums charged to Oracle since September, pushing borrowing costs into territory typically reserved for junk-rated companies.
This banking sector retreat has created tangible operational challenges. Several data center leases that Oracle had been negotiating have stalled because private operators couldn't secure necessary funding to build the infrastructure. Consequently, Oracle cannot deliver the capacity that its customers—particularly OpenAI—are counting on for their operations.
While some Asian banks remain willing to participate in financing, this doesn't address the immediate problem in the United States, where most of Oracle's expansion plans are concentrated.
Strategic Shifts and Customer Funding Requirements
Oracle has implemented several measures to address its financial constraints. The company now requires new customers to pay up to 40% of contract value upfront, essentially asking clients to co-fund the infrastructure development. Additionally, Oracle is exploring "bring your own chip" arrangements where customers would supply their own hardware.
Perhaps most significantly, Oracle is reportedly considering selling Cerner, the healthcare software unit it acquired for $28.3 billion in 2022. This potential divestment would represent a major strategic pivot, signaling that AI infrastructure has become Oracle's clear priority while other business segments become negotiable assets.
TD Cowen also noted that OpenAI has already begun shifting some near-term capacity requirements to Microsoft and Amazon, which doesn't reflect strong confidence in Oracle's ability to deliver on its promised timelines.
The company has not publicly commented on the layoff reports or the financing difficulties it currently faces, leaving industry observers to analyze the implications of these developments for Oracle's future in the competitive AI infrastructure landscape.
