Clearing Way for AI Strategy, Oracle Starts Thousands of Layoffs, Shares Get a Boost

TradingKey - As global corporate investment in artificial intelligence continues to climb, tech giant Oracle ( ORCL) has also joined the ranks of companies optimizing cost structures through layoffs.

According to reports, Oracle launched a company-wide layoff plan in the early hours of March 31 local time, with initial estimates involving thousands of employees, and the specific scale is still being dynamically adjusted.

Following the layoff news, Oracle's stock price rose nearly 6% that day and continued to edge higher in pre-market trading the next day. The market generally viewed this move as a positive signal of the company's focus on its AI strategy and cost structure optimization, which can release cash flow through labor costs while concentrating resources on AI infrastructure development.

According to insiders, Oracle's layoffs involve multiple global business units including Oracle Health, Sales, Cloud Computing, Customer Success, and NetSuite. Employees in some regions received layoff emails in the early morning, had their system access revoked immediately, and had their final work day set for the same day.

Analysts estimate that if the final scale of layoffs reaches 20,000 to 30,000 people, it could release $8 billion to $10 billion in free cash flow for Oracle annually, providing critical financial support for its AI data center construction.

In fact, rumors of Oracle layoffs have been circulating in the industry for weeks. According to the company's fiscal year 2025 annual report, Oracle's total global workforce was approximately 162,000 as of last May. Since the beginning of this year, Oracle's stock price has fallen by a cumulative 26%; in addition to the overall correction in the software sector, market concerns over its transition to AI cloud services are also a significant factor.

Investors worry that the traditional database business could be impacted by AI-native companies, while its strategy of building data centers for clients like OpenAI might weigh on the company's profitability in the long run. Affected by massive investments in AI projects, Oracle's free cash flow for fiscal year 2025 has turned negative.

These layoffs also reflect the overall trend in the tech industry. More than 70 tech companies have cumulatively laid off approximately 40,500 people so far this year, as firms accelerate the shift of resources toward artificial intelligence.

In recent years, Oracle has continued to increase capital expenditures, competing with cloud giants such as Amazon ( AMZN) to build AI data centers, but the company is relatively small in size and has long relied on debt financing to support its expansion.

Oracle stated in its latest announcement that the layoffs are part of its organizational structure optimization and that it will focus on high-growth business areas in the future. The company expects the total cost of its fiscal 2026 restructuring plan to be approximately $2.1 billion, with most of it allocated to employee severance. Despite facing short-term pain, Oracle remains confident in long-term growth and expects fiscal 2027 revenue to reach $90 billion, an upward revision of $1 billion from previous expectations.