The strongest financial report in 15 years cannot hide the hundred billion debt. Oracle is rumored to lay off 30,000 and implement "AI replacement." Can it fill the computational power gap?

Today (March 10), Oracle released a financial report that had Wall Street collectively applauding.

Total revenue was $17.2 billion, a year-over-year increase of 22%. Cloud business grew by 44%. The remaining performance obligation (RPO) reached $553 billion, surging 325% year-over-year. Oracle claims this is the first time in 15 years that both revenue and profit have grown by over 20%, with after-hours stock prices rising by over 10%.

However, during the same week, another set of news was circulating:

Several banks are quietly withdrawing from Oracle's data center projects;

A private credit agency refused to finance Oracle’s ten billion dollar data center;

Oracle is preparing to lay off tens of thousands of employees.

These two sets of news come from the same company and occurred in the same time frame.

01. Oracle's Financial Issues

First, free cash flow is negative, and significantly so

In the past 12 months, Oracle's free cash flow was negative $13.18 billion. Operating cash flow was positive $23.5 billion, but capital expenditures consumed more—this year’s full-year capital expenditure guidance is $50 billion, over seven times more than two years ago. Revenue is increasing, but cash burning is accelerating in sync.

Second, debt continues to expand

In this quarter, Oracle refinanced $30 billion through investment-grade bonds and convertible preferred stock, with total debt exceeding $100 billion. A larger number is hidden in the footnotes of the financial report: $248 billion in off-balance-sheet lease commitments. This means Oracle currently owes over $100 billion in loans, plus $248 billion in long-term lease agreements signed for over a dozen years—money that hasn't been repaid but is already owed.

Oracle promised in the conference call not to issue new debt for the 2026 calendar year. Promising publicly "no more new borrowing this year" carries significant implications: creditors have begun to feel uneasy, and Oracle had to come out and reassure them.

Third, the data center has just been completed, and the chips are already outdated!

The $553 billion RPO is the most attractive number in the financial report, up 325% year-over-year. However, Oracle explained in the conference call the source of these contracts: most equipment is either purchased with advance payment by customers or operated by Oracle using customer-supplied GPUs.

In plain terms: Oracle is increasingly playing the role of an “operating agency,” rather than investing its own money to build data centers for rent. This shift in business model relieves pressure on the balance sheet but also means Oracle is no longer a capital-heavy, profit-rich data center landlord, but has become a property management company for computing power—equivalent to a digital center version of “Wanda Commercial Management.” Meanwhile, Oracle's biggest customer, OpenAI, has canceled the expansion contract for the Texas data center.

The reason is that Oracle is using Blackwell chips, while Nvidia's next-generation Vera Rubin has five times the inference performance of Blackwell. OpenAI does not want to be bound to soon-to-be outdated infrastructure. The construction cycle for data centers is 12 to 24 months, while the chip upgrade cycle has been compressed to 12 months by Jensen Huang—completed and yet outdated, this contradiction has no simple solution. This poses a significant pitfall for Oracle, which focuses on data center business but does not control chip development.

02. "Replacing Workers with AI": Oracle's Financial Self-Rescue Strategy

How to fill the financial gap? Oracle has found a politically correct answer in the current environment: layoffs, under the rationale of AI replacement.

Currently, Oracle has about 162,000 employees, a TD Cowen research report estimates that Oracle will lay off 30,000 employees, which could release $8 to $10 billion in free cash flow for Oracle—specifically to fill the funding gap caused by data center expansion.

This logic is very clear: lay off workers, and use the saved money to build data centers that run AI.

03. Tech Giants Compete in Layoffs

Oracle is not an isolated case; any tech company that has over-invested in this AI arms race and is under cash flow pressure faces the same bill. "Replacing workers with AI" offers a financially reasonable, narratively legitimate, and shareholder-acceptable solution.

Currently, North American giants like Amazon/Meta are adopting this strategy, and the capital markets are responding positively.

The bill of the AI arms race eventually has to be paid by someone.

It's just unexpected that it's the workers who are footing the bill.

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