2026 has been a hard year to work in tech, even at companies posting record revenue. Salesforce trimmed its support division nearly in half earlier this year, then quietly cut more jobs in an AI-related shakeup in February.
The justification each time is the same: Artificial intelligence made the roles unnecessary.
Oracle is now writing a similar chapter, except its version comes with a much bigger price tag attached.
Managers are drawing up lists before September
Oracle has drawn up plans for a new round of layoffs in August, according to people familiar with the matter and an internal document viewed by Business Insider on Aug. 11.
Managers have been asked to submit lists of affected employees, with the goal of trimming payroll before Oracle’s fiscal second quarter opens on Sept. 1.
The cuts could reach double-digits percentage on some teams, according to the same document. Oracle declined to comment on the plans, so it’s obvious they are still keeping it internal for now.
The company already cut 21,000 jobs in 2026
This isn’t Oracle’s first pass. The company shed 21,000 roles, or 13% of its workforce, during the fiscal year that ended May 31. Headcount fell to about 141,000 employees, down from 162,000 a year earlier.
Severance and other exit costs jumped to $1.84 billion for the year, up from $374 million the year before, according to the filing.
Oracle itself has acknowledged that AI adoption is a factor behind the reductions, language that rarely shows up so directly in a corporate filing.
AI spending is straining Oracle’s cash flow
The reason for the urgency shows up on the other side of the balance sheet. That spending is chasing real demand: Oracle’s revenue grew 17% during fiscal 2026, an unusually fast pace for a company built on decades-old database software. But growth alone hasn’t covered the bill.
Oracle spent $55.7 billion on infrastructure in fiscal 2026, outspending its cash generation by $23.7 billion.
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To cover the gap, Oracle raised $43 billion in debt and another $5 billion through stock sales during the year, and it expects to raise roughly $40 billion more through a mix of debt and equity in the current fiscal year.
That math helps explain why job cuts and capital spending are now moving in opposite directions at the same company.
Cutting payroll is one of the few levers Oracle can pull quickly enough to offset a data center bill that keeps climbing.
Wall Street’s doubts are already priced into the stock
Oracle (ORCL) shares gained 1.2% in overnight trading after the layoff report. A modest reaction for a stock that hit a 52-week low in July.
Even with that bounce, Oracle remains down roughly 26% this year, a steeper drop than most of its cloud infrastructure peers.
Some of that skepticism has turned into outright bets against the stock. Investor Michael Burry disclosed a new short position in Oracle, calling the trade “like shooting fish in a barrel,” according to TipRanks.
Burry made a nearly identical bet against Nebius, another AI infrastructure company burning through cash, the same week.
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His thesis isn’t that AI demand is fake. It’s that companies borrowing heavily today are betting that demand stays strong long enough to pay off the debt.
Retail investors have also seized on a separate worry. Larry Ellison has pledged 346 million Oracle shares as loan collateral, an overhang that grows more sensitive every time the stock drops, according to a 24/7 WallSt analysis.
Not every analyst treats the cuts as a warning sign. Barclays argued in a note that the layoffs function mainly as cost discipline the market already expects, reported CNBC, and it kept an overweight rating on the stock.
The layoffs are a symptom, not the story
Oracle’s situation captures a pattern spreading across enterprise software. Companies with genuine AI-driven revenue growth, like Oracle’s cloud infrastructure unit, which expanded 77% last year, are still cutting staff because growth alone isn’t paying for the buildout.
That combination, rising revenue and shrinking headcount, is becoming a template rather than an exception.
Bank of America analyst Vivek Arya points to Oracle’s $638 billion cloud backlog as the eventual payoff, with margins expected to bottom out before improving.
About 12% of that backlog is due within a year, with another 34% landing over the next two to three years, according to BofA’s estimate.
That timeline gives Oracle a narrow window to convert contracted revenue into the cash it needs to keep paying down debt, and it depends on customers like OpenAI actually paying for the capacity Oracle is building.
