In light of significant financial demands posed by its ambitious AI datacenter expansion, Oracle might reduce its workforce by approximately 30,000 and sell its health technology division, Cerner, according to investment banker TD Cown. The financial strain is largely attributed to Oracle’s $300 billion contract with OpenAI. This accord necessitates a substantial capital expenditure estimated at $156 billion. Recent hikes in Oracle’s capital expenditure projections, raising concerns among investors, have only heightened these pressures.

TD Cown’s report indicates growing unease among both equity and debt investors regarding Oracle’s ability to fund its datacenter buildout. This concern is echoed in the widening credit default swap spreads and the stress visible in Oracle’s stock and bond performance.

The bank estimates that Oracle’s engagement with OpenAI, which also includes obligations to Meta and Nvidia globally, requires around 3 million GPUs and other IT assets, cumulating into a vast $523 billion dedication. As traditional finance streams, particularly in the US, appear restrained, Oracle has turned to Asia for more amicable terms.

Oracle is reportedly contemplating several strategies to address these financing hurdles. These include potential headcount reductions and exploring vendor financing mechanisms. Meanwhile, Oracle demands close to 40 percent upfront customer deposits, although exceptions might apply to large AI contracts. Despite these challenges, Oracle maintained a reticent stance, declining to offer additional comments.