Oracle plans more layoffs as AI data center costs soar
What's the story
Oracle is gearing up for a larger round of layoffs as it tries to rein in costs and fund the expansion of its AI-focused data centers. The tech giant now estimates that its 2026 restructuring program will cost around $2.8 billion, a significant increase from the $2.1 billion it has already recognized in restructuring costs, Bloomberg reported.
Cost breakdown
Severance payments for affected employees
The latest $700 million increase in Oracle's restructuring program is largely expected to come from severance payments for affected employees.
The company said the hike is related to "additional actions" it plans to take.
This comes as Oracle faces mounting financial pressure from its massive investment in AI data centers and infrastructure, which have been rapidly expanding due to demand from major customers like OpenAI.
Job cuts
Job cuts earlier this year
Oracle has already cut thousands of jobs earlier this year as part of its cost-preservation efforts.
The company had some 49,000 employees in the US and around 92,000 internationally by the end of May. This puts its total headcount at around 141,000 worldwide, some 21,000 fewer than a year ago.
During a recent earnings call, CFO Hilary Maxson highlighted "simplification and efficiency actions" as part of Oracle's strategy to cut costs and protect margins.
AI strategy
AI data center investments are costly
The AI boom has created a huge demand for computing power, and Oracle is trying to establish itself as a key player in providing the necessary infrastructure.
However, building data centers is extremely expensive as it requires massive investments in servers, networking equipment, electricity, and other infrastructure before companies can start seeing returns on that capacity.
Cost management
Larry Ellison's share-trading plan revealed
Oracle's latest increase in restructuring costs indicates that managing expenses remains a top priority even as the company expands its AI business.
The same regulatory filing also revealed a new share-trading plan involving Oracle Chairman Larry Ellison, who owns about 40% of the company.
The plan, implemented on June 22, lets Ellison sell up to 50 million Oracle shares through October 24.