Oracle Corporation (ORCL) is undertaking a massive strategic shift towards artificial intelligence infrastructure, triggering significant workforce reductions and a major capital raise. The enterprise software giant is reportedly preparing to lay off thousands of employees across multiple divisions, with estimates ranging from 20,000 to 30,000 positions, as it seeks to manage costs associated with an aggressive AI data-center buildout.
The company's stock moved modestly higher, gaining around 1.4% to trade near $154.60, even as broader U.S. markets declined. This movement comes ahead of Oracle's scheduled fiscal third-quarter 2026 earnings report on March 10. Analysts project adjusted earnings per share of $1.71 and revenue of approximately $16.9 billion, representing year-over-year growth of 16.3% and 20%, respectively.
To fund its ambitious AI infrastructure strategy, Oracle plans to raise up to $50 billion through debt and equity financing this year. This capital is earmarked for construction costs, hardware investments, and other requirements tied to expanding its network of data centers designed to support large-scale AI workloads and generative AI models for enterprise customers and partners like OpenAI.
The financial pressure from this expansion is substantial. Some Wall Street analysts expect Oracle's cash flow could turn negative in the coming years due to the scale of spending. As of Q2 fiscal 2026, Oracle carried total debt of $131.7 billion, negative levered free cash flow of $13.2 billion, and approximately $12 billion in capital expenditures. The company has begun requesting higher upfront payments from certain customers, sometimes reaching about 40% of contract value, to offset these pressures.
Financing challenges have emerged, with Blue Owl, Oracle's largest financing partner for the Stargate project, declining to support a proposed one-gigawatt Michigan campus late last year due to less favorable lease terms and concerns about rising leverage. Oracle has since indicated its total financing requirements could be significantly below $100 billion and is in discussions with alternative equity partners.
Analyst sentiment reflects this uncertainty. RBC Capital Markets lowered its price target on Oracle shares to $160 from $195 while maintaining a Sector Perform rating, citing funding concerns. Conversely, Citi maintained a Buy rating but lowered its target to $310 from $370, attributing the reduction to multiple compressions across the software sector while noting that recent debt and equity issuances may help fund the data center expansion.
