Oracle stock rises in premarket on plans to cut thousands of jobs

Seer There was a surge in pre-market trading on Wednesday as the multinational technology group sought to cut thousands of jobs to free up cash to build AI data center infrastructure.

The software giant has begun telling its 162,000-person workforce that thousands of people will be affected by a new round of layoffs, two people familiar with the matter told CNBC on Tuesday. Its shares were last up 2.6% in early market trading on Wednesday. Oracle declined to comment on CNBC’s report.

Investors remain uneasy about the company’s high capital spending on data centers that can handle AI workloads. While shares gained about 6% on Tuesday, Oracle’s shares are down about 25% so far this year.

The company announced plans in early February to raise up to $50 billion through calendar year 2025 through a mix of debt and equity to expand capacity for contracted cloud demand from customers. Nvidia, MetaOpenAI, Advanced Micro Devices and xAI.

Leading AI hyperscalers Alphabet, Microsoft, Meta, and Amazon have also committed nearly $700 billion in capital spending to fund AI development this year; This alarmed investors as it would reduce companies’ free cash flow without a clear promise of short-term returns.

Layoffs at Oracle will help free up cash flow Barclays analysts said in a note on Thursday. The investment bank said the stock has an overweight rating.

“Given ORCL’s current FY26 Restructuring Plan and previous reports, we do not view today’s layoffs as a surprise to the market, which appears to have appreciated the cost savings potential from ORCL’s actions as the company rapidly builds out its AI infrastructure capacity,” analysts said.

Barclays also highlighted that Oracle makes less profit per employee than its rivals and that employees are less productive than average. Analysts expect Oracle to triple its revenue over the next few years due to minimal staff increases and lower operating costs.