Oracle's Tuesday morning massacre
On Tuesday morning, thousands of Oracle employees were sent packing with an email. While there is no great way to conduct a mass layoff, this move felt particularly cold, waking up to an impersonal missive with the line: "We are sharing some difficult news regarding your position."
It was surely an awful morning for the estimated 20,000 to 30,000 employees who got that email — a number Oracle has yet to confirm or even acknowledge publicly. The company has been chasing AI infrastructure deals, particularly with OpenAI. It's an undertaking that has cost billions and generated mixed results to this point with its stock down over 25% so far this year. Even big layoffs, which counterintuitively usually appeal to investors, didn't move the needle much this week.
When you're dealing with surging capex, the money has to come from somewhere, and it seems to have fallen on the rank and file employees. Surely, Larry Ellison wasn't going to fire himself or perhaps take out a home equity loan on his private island, was he?
Just how much has capex increased? Consider that in FY2024 the company spent roughly $7 billion. In FY2025 that jumped to more than $21 billion, and it’s projected to reach around $50 billion this fiscal year. That’s an astonishing spending trajectory.
It's also why this week's action didn’t come as a surprise. In fact, reports earlier this year predicted layoffs of this scale, with TD Cowen estimating Oracle could save up to $10 billion in employee costs to reinvest in capex. Talk about robbing Peter to pay Paul.
Customers should worry
Whatever the actual number ends up being, when you lay off this many people, especially at a company that lives in the enterprise, it raises serious questions about whether Oracle is sacrificing customer experience to bankroll a massive infrastructure push whose returns may not materialize for years, if they ever do.
While the remaining employees deal with survivor's guilt and ballooning workloads, enterprise customers have to be wondering how this will impact their relationship with Oracle, and how well the products, already perceived as expensive and difficult to operate, will be impacted by cuts this deep.
Matt Stava, CEO of Spinnaker Support, a company that provides third-party support services for Oracle, was wondering the same thing. "The risk is that core support services, which enterprise customers rely on to keep legacy systems stable and secure, become strained at the very moment complexity is increasing,” he said.
It's not just Oracle
Big layoffs are everywhere these days with Oracle being just the latest. It’s not hard to draw a line between rising costs and workforce cuts, and increasingly that line leads back to AI-related expenditures.
The closest analog is Amazon, which laid off 14,000 people in October, then cut another 16,000 in early 2026 after projecting $200 billion in capex this year. Last year Microsoft laid off 15,000 employees including 6000 in May and another 9000 in July after spending over $88 billion in capex.
Over the last year, Meta has laid off over 5000 employees and a recent Reuters report suggests another monster layoff could be coming with up to 20% of the workforce or around 16,000 employees, potentially at risk. The company has been investing heavily in both infrastructure and high-end AI talent.
Google hasn't had the same numbers since laying off 12,000 in 2023, which was probably due to pandemic overhiring, but has continued to conduct smaller more surgical layoffs involving thousands of people over the last couple of years, while investing heavily in infrastructure.
Tech vendors will surely attribute this to AI replacing workers, but the more plausible story is that companies are cutting people to pay for their massive AI infrastructure binge. It’s a lousy trade‑off for the tens of thousands laid off to fund a bet that might never pay off.
The problem for all those workers is that whether it works or not, the bill just came due and they were sacrificed to pay it.
~Ron
