Oracle Is Squeezing Employees as AI Development Costs Mount

Of all the tech companies to reinvent themselves through the power of artificial intelligence, Oracle may be the most surprising. The software giant of yesteryear (well, the 1980s and ‘90s), which stumbled in software’s transition to the cloud, has gotten a new lease on life as an AI cloud provider. We’ll get an update on its progress on Tuesday when Oracle reports results for its quarter ending in August—the first of its 2026 fiscal year. (Oracle’s fiscal year runs June through May). But there’s been some clues dropped lately that suggest the company is slashing costs to help pay for its costly AI cloud expansion.

My colleague Anissa Gardizy hears Oracle executives are discussing eliminating cash raises and bonuses for employees this year, with additional stock grants likely to offset the cash compensation that isn’t being paid. That’s on top of widespread reports of layoffs at the company, at least some of which are based on regulatory layoffs in states such as California. (We reached out to Oracle for comment but didn’t hear back.) Still, severe cost-cutting is a predictable response to the financial strain that Oracle is under. 

In the May quarter, the company burned cash (technically it reported negative free cash flow) of $2.9 billion, thanks to capital expenditures of $9.1 billion, roughly triple what the company spent a year earlier.