Tech giant Oracle is reportedly considering its largest-ever workforce reduction as the financial burden of its ambitious artificial intelligence expansion — driven largely by a massive partnership with OpenAI — begins to bite.

According to a recent report by investment bank TD Cowen, Oracle is weighing layoffs affecting between 20,000 and 30,000 employees. The move could free up an estimated $8–10 billion in cash flow, funds the company urgently needs to finance a rapidly expanding network of AI-focused data centres.

OpenAI partnership proves far costlier than expected

TD Cowen estimates that Oracle’s commitments tied to OpenAI alone amount to nearly $156 billion in capital expenditure, including the deployment of roughly 3 million GPUs. The infrastructure push is aimed at supporting OpenAI’s growing computing needs under the leadership of Sam Altman.

To fund this expansion, Oracle has taken on significant debt. In just two months, the company raised about $58 billion — $38 billion for data centre projects in Texas and Wisconsin, and another $20 billion for a campus in New Mexico. Total debt is now estimated to be well above $100 billion.

Market value hit, lenders turn cautious

Since peaking in September 2025, Oracle’s share price has dropped sharply, wiping out an estimated $463 billion in market capitalisation. The pressure is also evident in credit markets. TD Cowen noted that several US banks have pulled back from financing Oracle-linked data centre projects, while interest rate premiums charged to the company have nearly doubled, approaching levels typically associated with junk-rated borrowers.

As a result, multiple data centre lease negotiations have reportedly stalled, raising concerns about Oracle’s ability to deliver capacity on schedule — particularly for OpenAI.

Strategic options on the table

To ease cash flow stress, Oracle is reportedly asking new customers to pay up to 40 per cent of contract values upfront and is exploring “bring your own chip” models, where clients supply hardware themselves. The company is also said to be considering a sale of Cerner, which it acquired for $28.3 billion in 2022.

Meanwhile, TD Cowen noted that OpenAI has begun shifting some near-term computing needs to Microsoft and Amazon, potentially signalling concerns over Oracle’s delivery timelines.

Oracle has not yet publicly commented on the reported layoffs or financing challenges.