Oracle’s mass layoffs are linked to rising debt from its $300 billion cloud deal with OpenAI. The company is cutting jobs across divisions to fund AI data centre expansion, as debt crosses $100 billion and free cash flow turns negative. Analysts say the layoffs could free up billions to support aggressive infrastructure spending.

Oracle's mass layoffs last week are still grabbing headlines with employees coming out sharing their ordeal. This marks the company’s largest restructuring ever as it grapples with massive debt from a landmark $300 billion cloud infrastructure deal with OpenAI. The job cuts span divisions including Oracle Health, Cloud Infrastructure, Sales, NetSuite, and development centres in India, driven by the urgent need to fund aggressive AI data centre expansion.

A $300 billion promise to OpenAI, and the debt spiral it triggered

In July 2025, Oracle formalised one of the largest cloud deals in history with Sam Altman-led OpenAI. Under the agreement, OpenAI committed to spending around $300 billion over five years on Oracle’s cloud services starting 2027. In return, Oracle pledged to build 4.5 gigawatts of AI data centre capacity across the US, equivalent to powering millions of homes. The ambitious project required Oracle to ramp up capital expenditure sharply, pushing annual capex to nearly $48 billion, largely funded through debt.

The stock has lost half its value, and cracks appear in the OpenAI relationship