Technology giant Oracle is moving forward with a significant workforce reduction. According to documents filed with California's Employment Development Department under the Worker Adjustment and Retraining Notification (WARN) Act, the company has eliminated more than 700 positions in California. This may only represent the initial wave of cuts. Based on various media reports and analyst projections, Oracle's global layoffs are expected to total between 20,000 and 30,000 employees, representing approximately 18% of its global workforce of 162,000.
This large-scale reduction coincides with Oracle's strategic pivot toward artificial intelligence infrastructure. The company is advancing its "Stargate" project in collaboration with OpenAI, which involves plans to construct multiple large-scale data centers with a total investment estimated in the tens of billions of dollars.
Despite Oracle reporting latest quarterly revenue of $17.2 billion, a 22% year-over-year increase, the company is facing significant free cash flow pressure due to massive capital expenditures on AI data centers. Capital expenditures for the current fiscal year are projected to reach $50 billion. Over the past twelve months, Oracle's free cash flow was negative $24.7 billion, marking the first time in over thirty years that it has recorded consecutive periods of negative free cash flow.
Analysts point out that Oracle is using profits from its traditional business segments to fund its AI infrastructure build-out. The cost savings generated from the layoffs are expected to be redirected toward purchasing expensive AI chips and constructing data centers.
Executive compensation has also drawn attention during this period. Notably, concurrent with the layoff announcements, Oracle appointed Hilary Maxson as its new Chief Financial Officer on April 6. Her annual salary is set at $950,000, with eligibility for a performance bonus of up to $2.5 million, alongside equity grants valued at up to $26 million.
Alongside the cuts in California, Oracle also reduced its workforce by 491 employees in Seattle, Washington, and by 539 employees in Kansas City, Missouri.
Oracle's workforce reduction is not an isolated event. In recent months, Amazon has cut approximately 30,000 jobs, Meta has planned a 20% reduction in headcount, and fintech company Block has laid off nearly half of its staff. The rapid advancement of artificial intelligence technology is driving a new wave of workforce adjustments across the tech industry, as companies generally scale back traditional business roles to reallocate resources toward AI-related initiatives.
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