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Oracle is considering a large-scale workforce reduction that could range between 20,000 and 30,000 jobs, alongside a potential sale of non-core assets, as part of a broader plan to restructure its finances and fund major investments in AI data centers. The move comes amid a noticeable pullback by U.S. banks from financing capital-intensive data center projects.

Estimates suggest that workforce reductions could free up between $8 billion and $10 billion in liquidity, giving Oracle greater flexibility to cope with rising borrowing costs and accelerating infrastructure investment requirements. The company is also reviewing the potential sale of its healthcare software unit Cerner, which it acquired in 2022 for $28.3 billion, as part of a wider strategic reassessment aimed at sharpening its focus on core businesses.

Rising Financing Pressures

These steps come as several U.S. banks have stepped back from financing Oracle-linked data center projects, amid growing investor concerns over the company’s ability to fund an expansion estimated to require $156 billion in capital expenditures.

The pullback has driven a sharp rise in borrowing costs, with interest rate spreads on data center project loans nearly doubling since last September, reaching levels typically associated with lower-rated borrowers. This has disrupted several leasing deals after private data center operators failed to secure construction financing, resulting in infrastructure capacity bottlenecks.

Despite these challenges, Oracle has turned to debt markets, raising approximately $58 billion over the past two months, including $38 billion for projects in Texas and Wisconsin and $20 billion for facilities in New Mexico. However, these funds cover only a fraction of total capital needs, as U.S. banks remain cautious about backing further expansion.

Meanwhile, some Asian banks have shown willingness to provide financing at higher interest rates, seeking to capitalize on rapid growth in AI infrastructure. While this offers Oracle an alternative path for international expansion, it does little to ease capacity constraints within the U.S. market.

Shifting Costs to Customers

To reduce balance sheet pressure, Oracle has introduced new policies, including requiring new customers to pay 40% upfront on contract values to help finance infrastructure investments. The company is also exploring “Bring Your Own Chip” (BYOC) arrangements, under which customers bear the cost of hardware, effectively shifting a significant portion of capital expenditure off Oracle’s books.

Analysts view the combination of workforce reductions and expanded financing arrangements as the most likely scenario, despite operational risks. BYOC could require renegotiating existing contracts, while large-scale layoffs may impact execution efficiency.

Market and Customer Impact

Financial pressures have already affected Oracle’s customer relationships, with some large clients redirecting near-term capacity needs to alternative providers. New data center contracting activity in the U.S. has also slowed, as private operators hesitate to commit to long-term agreements amid financing uncertainty.

Analyst opinions remain divided. Some see the divergence between U.S. and Asian bank financing as an early warning sign, while others argue that Oracle’s operational fundamentals remain solid, supported by growth in cloud infrastructure revenues and accelerating demand for GPU-driven computing capacity.

Nevertheless, experts broadly agree that large enterprises increasingly need to adopt multi-cloud and multi-vendor strategies to mitigate operational risks amid volatile financing conditions and rising capital costs in the AI infrastructure sector.