Why Oracle laid off 30,000 employees despite strong revenue growth

US-based IT firm Oracle has laid off thousands of employees globally, even as it continues to post strong revenue growth. The job cuts come as the company spends heavily on artificial intelligence (AI) infrastructure and large data centre projects, putting pressure on its cash flow.

On Tuesday, the company laid off around 2,500 employees in India, with another round of job cuts expected within a month. Globally, Oracle has eliminated about 30,000 positions.

Employees began receiving termination notifications early Tuesday. “After careful consideration of Oracle's current business needs, we have made the decision to eliminate your role as part of a broader organisational change,” copies of the notification email viewed by Business Insider stated. “As a result, today is your last working day.”

“After signing your termination paperwork, you will be eligible to receive a severance package subject to the terms and conditions of the severance plan...,” the termination email stated.

AI push behind spending surge

The layoffs come at a time when Oracle is aggressively expanding its AI and cloud infrastructure. The company is investing billions of dollars in building data centres to support AI workloads for clients such as OpenAI.

OpenAI has signed a contract to purchase about $300 billion worth of computing power from Oracle over roughly five years—one of the largest technology infrastructure deals in history.


The spending spree has sharply increased Oracle’s capital expenditure (capex). In the trailing four quarters ended February 28, 2026, the company generated $23.5 billion in operating cash flow but spent $48.25 billion on capex. This left free cash flow at negative $24.7 billion, compared with positive $5.8 billion a year earlier.

In the first nine months of the financial year 2026 alone, cash used for capex increased to $39.2 billion, up from $12.1 billion a year earlier. Oracle has directly linked the increase to the rapid expansion of its data centre infrastructure.

Revenue strong, but cash flow under pressure

Despite the spending pressure, Oracle’s business performance has remained strong.

For Q3 FY26, the company reported quarterly revenue of $17.2 billion, up 22 per cent in US dollar terms and 18 per cent in constant currency. Cloud revenue surged 44 per cent to $8.9 billion, while software revenue rose 3 per cent to $6.1 billion.

Over the past 12 months, operating cash flow reached $23.5 billion, an increase of 13 per cent.

Oracle’s remaining performance obligations (RPO) -- a key indicator of future revenue—jumped to $553 billion, up 325 per cent from last year.

The company said most of the increase in RPO came from large-scale AI contracts where the required hardware is either funded upfront by customers or provided directly by them.

Rising debt concerns

Even as revenue grows, investors are becoming increasingly concerned about Oracle’s rising debt levels.

A gauge measuring the cost of insuring the company’s debt against default recently reached a record high. The five-year credit default swap (CDS) spread rose to 198.18 basis points, the highest level on record, Bloomberg reported.

Across Wall Street, Oracle has become a key indicator of AI-related credit risk as major technology companies borrow heavily to finance AI infrastructure.

About $120 billion of Oracle’s bonds are part of the Bloomberg US high-grade corporate bond index, making the company the largest issuer in that universe outside the banking sector.

“Investors are focused less on top-line momentum and more on when Oracle can convert its infrastructure investment into durable earnings and cash flow,” analysts at JPMorgan wrote in a note.

AI boom reshaping tech workforce

The job cuts are part of a wider trend across the technology sector as companies balance rising AI spending with cost control. Oracle has been ramping up its cloud and AI capabilities to compete with industry leaders such as Amazon and Microsoft.

The company is also involved in the ambitious Stargate AI infrastructure project alongside OpenAI and SoftBank, which aims to invest up to $500 billion in AI infrastructure in the US.

However, the heavy upfront investment required for AI infrastructure has forced several technology companies to reduce their workforce. Over the past year, companies across the sector have announced thousands of job cuts while increasing spending on data centres and AI development.

For Oracle, analysts say the current phase reflects a long-term bet on AI -- one that may take several years to translate into sustainable profits and cash flow.