AI companies are spending huge amounts of money on data centers – infrastructure expenditure that comes with some shocking prices.
As bloomberg informed Last week, Larry Ellison’s Oracle may have gone a little too far. The company is planning to cut thousands of jobs due to a “cash crunch” as a result of its massive AI data center expansion effort.
Insiders told the outlet that at least some of the cut jobs will affect categories that will no longer be needed because of AI. Even job listings in its cloud division are reportedly being reviewed, indicating a serious cutback effort.
A day after the story was published, bloomberg reported later The company had ended its plans to expand its flagship AI data center in Abilene, Texas after “negotiations over financing delayed” and its project partner OpenAI changed its mind on the matter.
The data center is part of President Donald Trump’s $500 billion Stargate project, which was announced early last year just weeks after he became president.
Oracle has since denied this reporting statement to investment.comStating that the feature is still on track and OpenAI is still committed to data center expansion. However, there was no reaction to the reported job cuts.
The drama highlights how even some of the world’s most valuable companies are struggling to deliver huge plans to meet the intensive computing, electricity and water demands of increasingly powerful AI models.
This is despite investors being concerned that it may take years to get returns on their investments. Oracle does not expect to be cash flow positive until at least 2030, bloomberg Found in its analysis.
Meanwhile, tech giants are continuing to acquire massive amounts of debt to finance their data center construction, raising major alarm signs on Wall Street. Oracle announced in February that it was considering Add up to $50 billion in debt and equity sales This year alone.
As the crisis deepened, Oracle shares tumbled, falling more than 50 percent since their September 2025 high. Announcement The company’s largest restructuring ever – until last week. Shares have fallen nearly five percent in the past month.
Oracle’s troubles challenge the industry’s persistent belief that AI is replacing white-collar jobs. Instead, like quartz tellsMany companies like Oracle are simply reacting to financially pressing matters – such as their massive investments in AI creating a cash crunch.
There’s a memorable story playing out on Jack Dorsey’s block. The Twitter founder recently announced that he is laying off nearly half of his fintech company’s employees, citing recent advances in AI. However, former employees have since come forward, arguing that the bloc was responding by overhiring during the pandemic and instead reducing corporate bloat.
Oracle will report its third-quarter earnings on Tuesday and it is expected to meet Wall Street expectations. But given the drama over its data center expansion in Texas, cracks are beginning to appear as it continues to invest billions in AI.
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