Oracle cuts jobs again while pushing AI spending to $28.5B: the math that doesn't add up in the short term

By Zendoric · September 15, 2026.

Oracle began a new round of layoffs on Monday. Affected employees received notices that their positions were being eliminated due to a "broader organizational change," according to a Business Insider report citing three affected workers and an internal email; Oracle did not respond to requests for comment. This is not an isolated event: the company had already cut its workforce by some 21,000 people —13%— during the previous fiscal year, going from 162,000 to 141,000 employees by late May, as The Wall Street Journal revealed in June, with $1.84 billion in severance and other restructuring costs.

Last week Oracle raised the expected cost of its restructuring plan for fiscal year 2026 by some $700 million, to around $2.8 billion in total, a figure that includes layoffs, contract cancellations and other operating costs. The announcement came alongside results showing aggressive expansion: capital expenditure (capex, investment in assets such as data centers and chips) reached $28.5 billion in the quarter ended August 31, compared with $8.5 billion a year earlier. Free cash flow was negative by $5.4 billion. To finance that expansion, Oracle expects to raise some $40 billion in debt and equity this fiscal year.

At the same time, the cloud business is growing strongly: revenue rose 30% to $19.3 billion, and remaining performance obligations (RPO, the value of contracts already signed but not yet billed, a measure of the future backlog) reached $664 billion. Oracle said it had closed more than $30 billion in new AI-linked cloud contracts in the quarter alone. In other words: the company is laying people off while signing contracts worth tens of billions. Both things are true at once, and that is the heart of this story.

The market, however, has rewarded none of it. Oracle shares closed at around $150.28 on September 11 and fell another 3.7% on Monday, in line with a broad tech selloff, according to market data reported by Barron's. So far this year the stock is down roughly 23%, according to Reuters, despite solid results and an avalanche of AI contracts. Analysts cited by Reuters remain concerned about whether Oracle will be able to turn that enormous backlog into real cash fast enough to justify its infrastructure spending; a full recovery in cash flow could take years. On top of that, Larry Ellison, co-founder and executive chairman, canceled a plan that would have allowed him to sell up to 50 million shares —some $7.5 billion at the September 11 price—; Oracle specified that no shares had been sold under that plan and that Ellison has no other current selling plans. The source gives no indication of the reason for the move, so it is best not to over-interpret it beyond the fact itself.

Oracle is not a one-off case. Meta announced in April the cut of some 8,000 jobs —10% of its workforce— and left another 6,000 positions unfilled, while increasing spending on AI infrastructure and the hiring of specialists. According to Reuters, the company went so far as to consider a second wave of cuts under an internal project (Project OT) to replace large teams with smaller ones supported by AI systems, with reductions of up to 60% in some cases; the plan was abandoned after employee resistance and technical problems, including AI reliability. Amazon attributed a substantial part of a 30,000-job cut begun last October to AI-related changes, also according to Reuters. Microsoft, for its part, offered voluntary buyouts to some 8,750 employees in the US (7% of its US workforce) in April and announced another 4,800 layoffs in July, 3,200 of them at Xbox; Microsoft itself insists the Xbox cuts are not directly due to replacement by AI, though it acknowledges that AI is changing how work is done across the company.

That nuance from Microsoft is exactly the one not to lose sight of: not every layoff labeled "AI era" is a machine replacing a person in their job. Alphabet, Amazon, Meta, Microsoft and Oracle have jointly issued some $220 billion in bonds over the past year to finance data center expansion, according to Reuters. That money competes for the same budget as the salaries of entire workforces. At Oracle the pattern is clear: spend aggressively to become a leading provider of AI infrastructure and, at the same time, cut costs elsewhere to protect the bottom line. In some cases AI automates specific tasks; in others, it simply wins the budget battle against human capital because there is not enough money for both.

Our reading is that this episode illustrates, better than almost any other this year, the real tension of AI's current moment: building the infrastructure that will make the next generation of models possible demands such colossal capital spending that not even companies with record revenue and contracts can finance it without cutting staff and taking on debt at a scale that is beginning to unsettle investors. In the short term this is painful and concrete: thousands of people —at Oracle, Meta, Amazon and Microsoft— are losing their jobs in the middle of an investment boom, not a crisis, which is counterintuitive and hard to digest for those living through it. It is the honest face of the transition, and one worth not dodging.

But the very fact that the data centers and computing capacity that will underpin the next decade's models are being built, at this pace and with this level of capital commitment, is, in our underlying thesis, the physical infrastructure of future abundance: more cheap compute means, over time, more capacity to accelerate medical research, materials design and the automation of routine tasks that today consume entire working lives of administrative labor. The market's skepticism about Oracle —that 23% drop despite record contracts— is not a sign that the AI bet is misguided, but that the market demands to see, as soon as possible, that the $664 billion backlog turns into real cash and not just accounting promises. That investor discipline, demanding and uncomfortable for the companies, is probably healthy for the whole sector in the medium term.