Oracle’s AI transformation gets more expensive as layoffs continue
Oracle has raised its expected restructuring costs by $700 million to approximately $2.8 billion, with the program including workforce reductions linked partly to AI adoption.
Oracle is increasing the expected cost of its restructuring program by roughly $700 million as the technology giant cuts costs in some parts of its business while committing tens of billions of dollars to the infrastructure needed to capitalize on the artificial intelligence boom.
The additional expense, disclosed in a regulatory filing Friday, brings the expected cost of Oracle’s fiscal 2026 restructuring plan to approximately $2.8 billion. The program includes severance, contract terminations and other exit costs, and Oracle said it is partly tied to the adoption of AI across some functions.
The new figure adds another chapter to a workforce reduction that was already one of the largest publicly disclosed examples of AI-related job cuts in the technology industry.
Oracle said in its annual report three months ago that it had eliminated approximately 21,000 positions during the previous year, or about 13% of its workforce. The company explicitly warned that the adoption and deployment of AI across its operations had resulted, and could continue to result, in workforce reductions.
The cuts affected almost every major part of the company. Research and development lost about 7,000 employees, sales and marketing about 6,000, and Oracle’s cloud and services businesses roughly 3,000 each. The hardware division lost about one-third of its workforce, while administrative functions were also reduced.
The new restructuring charge suggests that Oracle’s effort to reshape its workforce is continuing even as the company enters one of the most aggressive investment periods in its history.
Oracle has said it plans to raise $40 billion through debt and equity financing during its current fiscal year, including a $20 billion stock sale completed in the first quarter. It also reported negative free cash flow of $5.40 billion, although that was better than analysts had expected.
Investors have been divided over whether Oracle can turn its rapidly expanding AI business into the cash flow needed to support continued capacity expansion.
The company’s backlog now stands at $664 billion, following a $26 billion increase. Oracle expects roughly half of that backlog to convert into sales within the next 36 months. It has also said that much of the newly contracted revenue will not require Oracle to provide all of the capital itself, because it can rely on customer prepayments and, in some cases, customers’ own supply of chips to build out capacity.
Those developments helped Oracle shares initially rise as much as 7.8% on Friday following its quarterly results. But the stock later reversed course and ended the day about 2% lower as analysts continued to question when the company’s cash flow would recover.
Oracle shares have fallen about 23% this year, compared with an almost 12% gain for the S&P 500, reflecting investor concerns about the cost of the company’s AI expansion as well as questions about the future of its traditional software business.
Ellison cancels $7.5 billion stock sale
Against that backdrop, Oracle co-founder and executive chairman Larry Ellison canceled a plan to sell as many as 50 million Oracle shares, worth approximately $7.5 billion based on Friday’s closing price.
Oracle said Saturday that no shares had been sold under the plan and that Ellison has no other plans to sell Oracle stock. The company did not give a reason for the cancellation.
Ellison, 82, is Oracle’s largest shareholder, with more than 38% of the company, according to LSEG data. He had adopted the trading plan on June 22, with an expiration date of October 24.
The decision comes after Oracle’s stock has declined sharply. The shares were more than 18% below their June 18 closing level, the last trading day before Ellison adopted the plan.
The cancellation does not change Oracle’s underlying financing needs, but it comes at a moment when investors are closely examining how the company will fund its AI ambitions and whether those investments can eventually produce the cash generation expected of a company of Oracle’s scale.
