Data center giant Oracle‘s stock took a 3% hit in early premarket on Monday, after the company announced plans to raise up to $50 billion to develop additional capacity for customers, and an analyst said the company was considering laying off thousands to free up cash flow.
Hyperscalers have scrambled to build the infrastructure needed to power AI, with data center deals hitting a record $61 billion in 2025 and multiple big tech firms committing huge sums amid a funding rush.
Why the stock dropped
Oracle said on Sunday it planned to raise $45 billion to $50 billion of gross cash proceeds during the 2026 calendar year to build additional capacity to meet contracted demand from its cloud customers, which include Nvidia, Meta, OpenAI, AMD, TikTok and xAI. The funding will be raised in debt and equity.
On Jan. 26, an analyst note from TD Cowen said that their “channel checks” indicated that Oracle was considering laying off 20,000 to 30,000 employees which could drive around $8 billion to $10 billion of incremental free cash flow.
Oracle stock over the past year.
Oracle had not responded to a request for comment from CNBC when this article went live.
The note added that layoffs were one of the “multiple paths forward” the company was considering. The others included asset divestures to reduce its debt load and vendor financing.
Oracle has made huge bets on the AI infrastructure rollout in recent times. In September, it raised $18 billion in a bond sale and inked a $300 billion deal with OpenAI.
Investors have flagged concerns over Oracle’s aggressive AI buildout plans and debt raising.
Oracle’s stock has dropped 50% since its peak in September. It dropped 11% after disappointing quarterly results in December, when it posted slightly lower than expected revenue.
“We’re entering the end-game for AI exposed stocks, it’s do or die and what we’re seeing is many firms, like Oracle and Microsoft go all-in on the technology,” Michael Field, chief equity strategist at Morningstar, told CNBC as Oracle’s stock struggled on Monday.
He added that the likely binary outcome of this massive investment is forcing investors to either back stocks or sell them.
“The problem for Oracle,” Field added, is that it’s “diluting the holding of existing shareholders and taking more debt to fuel this investment, hence the dismay by investors.”
AI data buildout is a flashpoint this earnings season
On Thursday, Microsoft shares tumbled 10% after investors latched onto the growth of its cloud computing platform Azure and other cloud services falling slightly below expectations, though many analysts remained bullish. Meta stocks jumped 8% after reporting huge AI spending the same day.
