Oracle Lays Off 30,000 and Nike Falls Flat Once Again

In this episode of Motley Fool Money, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• OpenAI’s $122 billion capital raise.
• Nike’s disappointment.
• Oracle’s layoff of 30,000.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on April 1, 2026.

Travis Hoium: OpenAI is raising $122 billion. What comes next? Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoium. I'm joined today by Rachel Warren and Lou Whiteman. Guys, the big headline of the end of the day yesterday was that OpenAI has, I guess, officially now raised $122 billion. I don't think they have all the cash yet. But this is companies like Amazon, SoftBank. Microsoft is apparently back in the game investing in OpenAI. But, Lou, I'm curious about a couple of things. I think definitely the biggest raise in Silicon Valley, maybe even the biggest raise ever for a company single raise ever for a company, and they're not really close to being profitable. Does this bring an IPO closer? Then we also have the Arc funds are investing. Now, retail is coming in as well, through a back door. What are your thoughts on that? I know it's a big question, but it just seems like they're setting up for this IPO, but yet they still are burning through tons and tons of cash.

Lou Whiteman: I think it's important to note that some of this is backwards-looking. Some of this is just announcing the close of around where they've announced some of these, or at least it's been reported if they haven't announced it before. A lot of this is just what was coming. The IPO, look, they say two billion or so in revenue per month, so figured out on valuation, about 35 times sales. Guys, I'll be honest. I've seen worse.

Travis Hoium: That's not so crazy, but that is true.

Lou Whiteman: But look, theoretically, it's growing, so that's good. Huge caveats with this. Some of Amazon's money is tied to achieving artificial general intelligence. If and when that happens, we'll see. It feels like just lawyer bait. Doesn't it feel like we're gonna end up in court in two years battling over whether or not the AI is, actually, general intelligent or not? The interesting thing here, though, is trying to figure out what from here. OpenAI wants to go public. Shares already trade on secondary markets. Reportedly, it is hard to find buyers for these shares right now. Anthropic is all the rage. I think that's a better gauge, if true. Again, I'm not on those. I don't know that. If true, that is a more interesting data point than basically a press release announcing all of the hard work they've done. But to be honest, OpenAI needed the win. It's been a rough couple of weeks for them. Even if this is just them out here beating their chest, saying, we're still in this game. We're still in this. Look at all this money we have. Don't be dismissive of us. Maybe that's what they need right now.

Travis Hoium: Rachel, what do you think when you saw this? Like Lou Whiteman Lou said, some of this we knew was coming, and we knew they needed a bunch of cash because the projections are just insane amounts of cash burn over the next few years. But it does still seem notable that some of the biggest companies in the world are just throwing tons of money at it.

Rachel Warren: This funding round values OpenAI at around $852 billion. You put that in perspective. That's more than the market cap of most Blue Chip companies on the S&P 500. OpenAI hasn't even hit the public markets yet, obviously. We have seen, of course, in the past, a bit of a gap between the private market valuation and what a company looks like once they hit the public markets. As Lou mentioned, they're bringing in about $2 billion a month in revenue. But they're looking at a projected $14 billion loss in 2026. They've already said they're planning to burn through about $115 billion in cash over the next two years due to their investments in data centers and artificial general intelligence.

Then you're thinking how does an IPO make sense for investors? If you're an institutional investor, you're betting on the foundational layer of the entire AI economy. We've seen institutional investors, essentially, salivating to own a piece of the business. I'm curious about whether that appeal, how that's going to translate to a public listing.

When you're looking at valuation of this magnitude, a significant chunk of at least near-term future success is already priced in. For the stock to really pop post IPO, OpenAI doesn't just have to succeed. It has to become one of the most valuable companies in history. What would be really interesting is when we see that S-1 filing, right, really pulling back the curtain on their exact margin structures, their compute costs. I think if those disclosures show diminishing returns or even that open source rivals are eating some of their pricing power, that growth at all cost narrative could sour quickly. Those are some things I'm thinking about right now.

Lou Whiteman: Well, the IPO is fascinating because you can game an IPO. This isn't news, and we're not talking about anything. For example, one of the reasons SpaceX will achieve their $1.5 trillion or whatever is they are not going to sell a lot of shares. You can set supply based on demand. OpenAI is a very different story. Arguably, even if they're a success from here, the buzz is gone. There are going to be a lot of insiders who are looking for exits. Plus, you have a huge need for money. They're not really positioned to just sell a small sliver because they actually need to raise this money as soon as possible. It's a tough IPO to get right. I think that's the next move here if they get there. I wouldn't be surprised, actually, if you see an additional bridge round before then. I don't know if an IPO is looking likely in at least the next six months.

Travis Hoium: That does seem a challenge, Lou, that they are in this position. We've seen this with companies. Just back in my history, I remember SunEdison was one of the hottest stocks on the market for a little while, but their entire business model was predicated on raising the next round, which was theoretically going to pay off. That worked literally until it didn't, and OpenAI seems to be in the same situation today where if AGI you keep moving the goalposts further and further out, AGI is this, panacea of cash flow. But we're going to need a ton of cash to get there. If the market rejects that, and you go from being an $800 billion company like they are today, and let's say that IPO price is at $400 billion. Still one of the biggest companies in the world, that's really problematic.

The other thing that I wanted to bring into this was the companies funding them are some of the biggest companies in the world, and they're getting more and more stretched. I'm just looking at Amazon's free cash flow and balance sheet. Their free cash flow over the past 12 months, less than $8 billion, and that will be negative in 2026, and they have $66 billion worth of debt. You're getting a little bit different story yet. Like Microsoft and Google, they have a little bit more cash flow. They don't have the same investments that they need to make in some of their non-data center businesses. But SoftBank is taking out debt to fund these rounds. It seems the private markets are stretching to a point that we've probably never seen before. Lou, is that at least a reasonable way to think about it? Because I know we talked on Friday about how would the market react if a company like Amazon said, You know what? We're going to spend less next year. Are we at the point where the market would react positively? That would be probably trouble for OpenAI.

Lou Whiteman: We can talk about that later, too, when we get to some of our other stories, too, I think, exactly what situation that some of these companies are in right now. You just made the case for OpenAI. I'm going to be wrong. I open I will go public, because I do think that there are less options from here on additional private funds. Look, I think the best time for OpenAI would go to have gone public was a year ago, and they didn't and so now they're faced with reality. I think there will be money there for them. But will it be at the levels they need versus some of these venture capitalists facing that maybe the redemption won't be at a profit from this round? That's going to make it really difficult for them to do private funding from here, too. I think they're in a bind, and I think that's why you're seeing all this press and some pretty dramatic cutbacks. I think they're in a hey, remember us moment?

Travis Hoium: It’ll be fascinating to watch because, like you said, Anthropic is the belle of the ball right now. When we come back, we are going to get to the other hot stock of the day that is Nike, which is plunging and trading. You're listening to Motley Fool Money.

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Travis Hoium: Welcome back to Motley Fool Money. Nike is down 14%, as we're recording early on Wednesday, they report ho-hum quarterly report. After the market closed yesterday, this isn't a company that's really been knocking it out of the park for a while now, but revenue was flat. Constant currency sales were actually down. Rachel, what did you see, and what is the market just rejecting today?

Rachel Warren: I think the market is somewhat losing patience with the grueling multiyear restoration of the business that CEO Elliott Hill is still spearheading. This was their Q3 report. Revenue was a little over $11 billion, earnings per share, $0.35. Both of those were, actually, a slight beat compared to analysts were looking for. But I think what we're seeing in terms of the market's response, which I think is close to an eight-year low at this point, really reflects a lot of deep anxiety over their upcoming guidance. They're projecting a 2-4% sales decline in this upcoming quarter, and that's also against the backdrop of a 20% anticipated revenue drop in greater China, which has been a significant market for them.

We're also seeing a time where management is intentionally pulling back inventory of some of their classic footwear franchises to try to clean up the marketplace. That's putting pressure on some of the numbers. There's also margin pressure from tariffs. That is still a notable factor for a business like Nike. There are some pockets of resilience that maybe suggest a bit of a U-shaped recovery for the business. The performance running category has been making strides, so to speak, North American wholesale business as well as Nike's really reembracing its former relationships with its retail partners. Management is expecting positive gross margins by Q2 of their fiscal 2027.

I think for now, though, we're really waiting to see, and I think this is the market's tepid response to their results showing that. How can Nike out innovate rivals like On Holding and Hoka while managing a lot of the trade costs and other headwinds they're facing as a business right now. I think we still need a few more quarters to see how that's all going to shake out.

Travis Hoium: Lou, the fascinating thing here is, I have analogized them to Under Armour, which is not a flattering analogy. But if you look at this Nike's stock first passed the $45 stock price in 2014. The stock has gone nowhere for 12 years. We're in a 74% drawdown as we're recording, and still, shares are trading for 30 times earnings and 30 times forward estimates. We talked about target before, where they can't seem to do anything right. But then you look up and the stock trades for 10 or 11 times earnings. You go, I may find some value in that if they can turn things around. This has still got to be a huge turnaround for Nike, and it just doesn't seem like it's sticking.

Lou Whiteman: We like to talk in terms. Hot takes are our job, and we like to say things like, they're doomed. They're a successor. A lot of times the truth is the boring middle. Nike is fine as a company, and it's just not interesting as a stock. Both of these things are true. For all the gloom and doom, it's a profitable company generating $45 billion in annual sales. Anemic growth, but growth. It's not going anywhere. There is a turnaround plan. I don't think it's going to be like the rocket shift from the '80s again, but there is signs that the turnaround plan is working. It's just not an attractive investment. To your point on valuation, I don't know what it could be. We talk about they have to out-innovate On Holdings, but the point is that On Holdings exists.

It used to be that with your muscle and and marketing, Nike could just flood the market and dominate. That was before Instagram. That was before TikTok. One good influencer can get you in the game now, especially for a niche or a sport. The world has changed in ways that don't benefit Nike. I'm not saying it can't continue on as a company. I'm not saying that it won't be the biggest seller of athletic shoewear from here. I think it could be. I still don't think it's going to get my attention as an investment.

Travis Hoium: It is fascinating how this has changed to those supply demand dynamics. The interesting thing I saw in the report was that they're, actually, gaining share in wholesale. That was up nicely mid single digits, but their direct-to-consumer is down. The strategy that they put in place when the pandemic started, and what you think these companies would like to be growing is that building that direct relationship to customers just still not clicking.

Lou Whiteman: To be fair, that is intentional, because that is what they said that we overdid that. We have to get back in good graces with wholesale. It is partially intentional, whether or not it's a good long-term strategy. We'll see.

Travis Hoium: Still, they've lost a lot of that shelf space to the companies like we've been talking about. When we come back, we're going to go back to artificial intelligence and Oracle's news. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Oracle is back in the news. This time for maybe not great reasons, 30,000 people have lost their jobs. I think all those notifications went out. Yesterday's we're recording. This has just been an absolutely crazy ride for Oracle. We went back and looked. Remember that announcement that seems it was 10 years ago. They added $300 billion worth of remaining performance obligations. A lot of that was coming from OpenAI. Their stock popped on that news. Shares were up 30% in a day or two. They're now down 40% since since before that announcement. The market is rejecting what their new strategy shift is, Rachel. It seems fascinating that they're now saying what? We're still going all in on AI, and we're going to sacrifice the jobs that have gotten us to be the company that we are today.

Rachel Warren: That's right. These reports of about 30,000 layoffs, it's staggering. One number I saw it's about 18% of their global workforce. They're very much caught up in a high-stakes AI arms race, if you will. They've committed 50 billion in Capex for fiscal 2026 to build out the data centers needed for clients like OpenAI and Nvidia they beat expectations on the top line in the recent quarter, but they're dealing with negative free cash flow. Now, these job cuts are expected to free anywhere $8-$10 billion in annual cash flow. That's very much a calculated move, I think, to perhaps satisfy Wall Street's mounting anxiety over their debt load, so to speak.

I think it's also an interesting question. Is Oracle fundamentally trying to change its business model from a high-margin software provider to a capital-intensive AI landlord? That's what we're seeing. We saw Oracle's stock jump immediately following the layoff news, but as you noted, Travis, shares are still down significantly from recent high. I think what we're seeing, as well, is they are essentially betting the house that AI cogeneration is going to allow the company to build more software with fewer people and justify that human cost as a necessary step to fund their 300 billion partnership with OpenAI and other partners. They've proved they can cut costs, but now they have to prove that they can convert that AI backlog into actual profit before that debt service becomes unmanageable.

Travis Hoium: Lou, it seems like Larry Ellison is going bigger, going home with this bet on AI.

Lou Whiteman: Look, I don't honestly know what's going on here. I think six months ago, if you announced this because our AI is so great, the market might be cheering it. Now, there's the skepticism. Look, all of these companies overhired during COVID. I do think some of this is just the smokescreen using the smokescreen of AI to right size, but everything said here, they have a ton of capital commitments coming up. A lot of the revenue sources is OpenAI. A lot of that RPO. There is real questions about revenue, so they do need to cut corners. Interesting thing, Travis, and we hinted at this before OpenAI. I think right now, game theory would suggest that even if any of these hyperscalers are having second thoughts, their most rational move is to keep spending. We can deep dive on that if you want. But even if you think it's a mistake, you almost have to keep spending right now. I wonder if that is true. We don't know that's true. Maybe they don't see it as a mistake. It's the whole premise might be false, but it could be a period of really weird volatile decision-making, if that's the case, though for these companies.

Travis Hoium: Let's take Google as an example. Hey, if we overbuild, we would be better off overbuilding in artificial intelligence and data centers and GPUs and all that stuff rather than underbuilding and missing out on the opportunity. But then you look at a flip side, like Oracle, and they're building with debt. It seems the calculus is just very different. If they have to keep up with those other bigger hyperscalers, they just don't have the fallback, and that's what seems to be the challenge to me is that if Google spends all their cash flow for the next three years and then realizes it's not a great return on investment, they can just reverse course, they'll be fine. Microsoft will be fine, Amazon will be fine.

Lou Whiteman: I think that's part of it, but look, very simple. They have all said we are pursuing this because it is the future. If they all blink together, it would be fine. But if one of them blinks, even if everybody's seeing the same thing, and even if it's the rational move, I think the read will be Ours isn't as good as everybody else's, or we have failed. I do think that just the short-term decision-making matrix is to keep doubling down, even if you have doubt until there are clear signs that your competitors are. If they could all get in a room, what would they actually talk about? Who knows? But I don't think that's going to happen. It just sets up. There could be remarkably bad decisions made where 10 years from now, you look back and say, what were they thinking? I'm trying to get at maybe what they were thinking.

Travis Hoium: The other thing that we need to think about as investors is the market is starting to send those signals, and the market is we talked about it on the Friday show. Management teams are going to have to start thinking about, hey, if we cut back, is the market going to cheer? Because if you've got a crashing stock price, eventually, somebody's going to lose their job and implement a different strategy, and they're going to look like a hero. A lot of game theory, as you said, going on in Silicon Valley right now be fascinated to follow over the next few years.

As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for Akan, so I'll buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool’s editorial standards. It is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show off. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis Hoium. Thanks for listening. We'll see you here tomorrow.

Lou Whiteman has no position in any of the stocks mentioned. Rachel Warren has positions in Alphabet and Amazon. Travis Hoium has positions in Alphabet and On Holding. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nike, Nvidia, On Holding, and Oracle. The Motley Fool recommends Under Armour. The Motley Fool has a disclosure policy.