Introduction: What's Happening with Oracle Amid Global Layoffs of 30,000?

Li Ping/Author Lishi Business Review/Producer

1

30,000 Employees Globally 'Terminated via Email'

Recently, U.S. tech giant Oracle initiated a surprise large-scale layoff globally, with a total expected headcount reduction of 20,000-30,000, accounting for nearly 18% of Oracle's 162,000 global employees. This marks one of the largest layoffs in the global tech industry since the start of 2026.

According to feedback from multiple Oracle internal employees on social platforms, around 3 a.m. on the day of the layoffs, they were suddenly cut off from accessing the company's internal systems and received termination notices via email. This round of layoffs affected multiple core departments of Oracle, including health, sales, and cloud services, covering major global markets such as the United States, India, and Europe. Notably, 12,000 employees in India alone were laid off, making it the hardest-hit region in this downsizing.

For a long time, Oracle has been widely known as Silicon Valley's 'retirement plant' due to its characteristics of job stability, slow pace, no overtime, and good benefits. However, this global mass layoff has completely shattered that image. It is reported that Oracle's official explanation for the layoffs was brief, merely stating in the notice: 'After careful consideration of current business needs, we have decided to eliminate your position as part of a broader organizational restructuring. Therefore, today will be your last working day.'

While the layoff emails were being mass-sent, the company emails, internal systems, and access permissions of the laid-off employees were immediately cut off, with no prior communication, one-on-one discussions, or work handover buffer period. Regarding severance pay, Oracle offered four weeks of base salary, plus an additional one week of salary for each full year of service, up to a maximum of 26 weeks.

As of now, Oracle has not issued any comments on this layoff incident nor disclosed the exact number of layoffs. However, there is widespread belief in public opinion that since Oracle is heavily investing in AI data center construction, this round of layoffs is primarily aimed at reducing costs and improving efficiency, freeing up cash flow for its AI business by strictly controlling operational costs.

Additionally, as large language models (LLMs) increasingly demonstrate exceptional capabilities in understanding scientific literature and generating high-quality code, the latest large models such as Claude Opus 4.5 and GPT-5.2-Codex can already generate high-quality code. Many software companies have started using large models to generate program frameworks and simple logic to reduce the number of mid-to-low-level programmer employees.

According to public reports, on February 27 (Beijing Time), fintech company Block suddenly announced the layoff of about half of its employees. In response, Block's co-founder and CEO, Jack Dorsey, stated that with the efficiency improvements brought by 'intelligent tools,' most companies will be forced to make similar structural adjustments within the next year. He simply chose to 'take this step openly in our own way rather than eventually being forced to respond passively.'

Some analysts also believe that Oracle, in order to concentrate resources on training smarter AIs, has not hesitated to lay off standardized engineers who have been in high demand over the past decade, which can be considered a disguised form of 'robot replacement.' In other words, the first wave of impact from the AI wave did not attack traditional fields but instead targeted the IT industry represented by asset-light businesses, even including those who once participated in building this edifice.

2

Business Growth and Cost Pressures

From the company's latest financial report data, Oracle is far from reaching a 'desperate' stage. On the contrary, due to the rapid growth of businesses such as cloud infrastructure, Oracle's financial results for the third fiscal quarter were quite impressive, with a substantial backlog of orders and fiscal 2027 guidance exceeding market expectations.

According to Oracle's financial report released on March 11, in the third fiscal quarter of fiscal 2026 (ending February 28, 2026), Oracle achieved total revenue of $17.190 billion, a 22% year-over-year increase, higher than the market expectation of $16.91 billion; net profit was $3.721 billion, a 26.5% year-over-year increase. This marks the first quarter in 15 years where Oracle achieved both revenue and adjusted profit growth rates exceeding 20%.

As the world's largest enterprise software company, Oracle's traditional strength lies mainly in areas such as databases, tools, and application software. In recent years, Oracle has continued to increase its investment in AI infrastructure, accelerating its transformation into a cloud services giant to meet the challenges posed by giants such as Amazon AWS, Microsoft Azure, and Google Cloud GCP.

From a revenue composition perspective, Oracle's main business is divided into four major segments: cloud business (Cloud), software business (Software), hardware business (Hardware), and services business (Services). Among them, the cloud business includes IaaS (Infrastructure as a Service) and SaaS (Software as a Service), which are currently Oracle's fastest-growing business segments.

It is reported that IaaS is primarily provided through Oracle Cloud Infrastructure (OCI), including the company's signature database cloud services and computing power leasing business. SaaS is mainly provided through Oracle Cloud Applications (OCA), including SaaS-based enterprise resource planning (ERP), customer relationship management (CRM), and other general management tools, as well as some vertical industry-specific tools.

In the third fiscal quarter of fiscal 2026, Oracle's cloud business achieved sales revenue of $8.9 billion, a 44% year-over-year increase, accounting for 52% of total revenue. Among them, cloud infrastructure (IaaS) achieved sales revenue of $4.9 billion, an 84% year-over-year increase, becoming the key driver of rapid growth in cloud business revenue; SaaS business achieved sales revenue of $4 billion, a 13% year-over-year increase.

In addition to the cloud business, Oracle's other three major business segments also achieved positive growth. Among them, software revenue reached $6.119 billion, a 3% year-over-year increase, accounting for 36% of total revenue; hardware revenue reached $714 million, a 2% year-over-year increase; services revenue reached $1.443 billion, a 12% year-over-year increase.

Oracle's software (Software) business refers to traditional software businesses deployed and managed by customers themselves, mainly consisting of software license sales (software license) and software support services (software support). It was once the largest revenue segment for the company, with revenue once exceeding 60% of total revenue.

Since fiscal 2025, the cloud business has gradually replaced traditional software businesses as Oracle's largest source of revenue. From the latest financial report data, the cloud business now accounts for more than 50% of Oracle's revenue, marking Oracle's successful transformation into a cloud-centric technology company.

It is worth mentioning that from the perspective of remaining performance obligations (RPO), Oracle's future performance is still worth anticipating. According to the financial report, in the third fiscal quarter of fiscal 2026, Oracle signed new contracts worth over $29 billion, and the company's remaining performance obligations (RPO) reached $553 billion, a 325% year-over-year increase.

Furthermore, in terms of future performance guidance, Oracle expects total revenue in the fourth fiscal quarter of fiscal 2026 to increase by 19%-21% year-over-year in U.S. dollar terms, with cloud services revenue increasing by 46%-50% year-over-year in U.S. dollar terms. At the same time, Oracle maintains its guidance for total revenue of $67 billion in fiscal 2026 and capital expenditures of $50 billion for the year, while raising its total revenue guidance for fiscal 2027 to $90 billion, higher than the previous market consensus of $86.6 billion-$86.7 billion.

Due to the comprehensive outperformance of quarterly financial results, remaining performance obligations, and performance guidance compared to market expectations, Oracle's stock price surged more than 9% the day after the financial report was released but has since entered a state of gradual decline. As of the close on April 7, Oracle's latest market capitalization is approximately $506.9 billion, having shrunk by nearly $500 billion from its historical high.

So, why is Oracle, with $550 billion in orders, not favored by investors?

3

Concerns Arise Over Revolving Financing

In September 2015, Oracle released its financial report for the first quarter of fiscal 2026, showing that as of the end of August 2025, the company's remaining performance obligations surged by 359% to $455 billion, far exceeding the market consensus of $178 billion. This calculation suggests that Oracle's backlog of orders has already been scheduled for the next decade.

Stimulated by this news, Oracle's stock price once rose more than 40% during intraday trading, with its peak market capitalization once approaching the $1 trillion mark. Company founder Larry Ellison also briefly surpassed Elon Musk to become the world's richest person.

However, investors soon discovered that Oracle's surge in orders was almost entirely contributed by a single company, OpenAI. It is reported that OpenAI signed a five-year computing power procurement agreement with Oracle, with a total value of $300 billion, equivalent to 94.6% of the new RPO ($317 billion) reported in Oracle's first-quarter fiscal 2026 financial results.

It should be noted that for the computing power purchaser, OpenAI, the above five-year, $300 billion large order requires an average annual expenditure of $60 billion. However, OpenAI's annualized revenue is only $10 billion, with losses amounting to $5 billion. Clearly, OpenAI's current revenue-generating capacity is far from sufficient to cover the average annual expenditure of $60 billion brought by the agreement.

For Oracle, concentrating future revenue too heavily on this unprofitable star startup seems unwise. According to the agreement, Oracle needs to provide OpenAI with up to 4.5 gigawatts of power capacity, equivalent to the total power generation of two Hoover Dams, or sufficient to meet the annual electricity needs of approximately 4 million U.S. households.

In addition, Oracle also needs to borrow to procure AI chips, with the hidden risks being self-evident. Some analysts believe that Oracle is expected to need to borrow $100 billion to complete the AI infrastructure investments required for the above $300 billion order. Clearly, once OpenAI's operations or external financing progress fall short of expectations, the risks involved are self-evident.

Therefore, the focus of secondary market attention has shifted from the previous huge orders to OpenAI's true ability to fulfill the contract, as well as Oracle's capital expenditure pressures and cash flow performance. Against this backdrop, Oracle's stock price began to decline from its rise.

Subsequently released second-quarter financial results (corresponding to September-November 2025) showed that as of the end of November 2025, Oracle's backlog of orders had reached $523 billion, an increase of $68 billion year-over-year. However, from the perspective of operating cash flow, Oracle's free cash flow for the quarter was negative $10 billion, with capital expenditures (CapEx) reaching $12 billion, significantly exceeding the market expectation of $3.7 billion.

It is not difficult to see that from the perspective of free cash flow, Oracle is already in a state of 'running out of money,' indicating that the concerns of the secondary market are becoming a reality. Therefore, after the release of the second-quarter financial results, Oracle's stock price plummeted by 11%, with an intraday maximum decline exceeding 15%.

From the latest third-quarter financial report data, Oracle's free cash flow for the quarter was negative $11 billion, an increase from the negative $10 billion in the second fiscal quarter. Capital expenditures for the quarter reached $18.6 billion, far exceeding analysts' expectations of $14 billion. Clearly, this indicates that the concerns of the secondary market still exist, which is also one of the main reasons for Oracle's stock price to resume its decline after the release of the third-quarter financial report. Behind the exodus of investors, concerns over an 'AI bubble' in the secondary market have become the biggest negative factor suppressing Oracle's stock price.