The strongest financial report in 15 years can't hide a trillion-dollar debt. Rumors suggest Oracle is laying off 30,000 employees to replace them with AI. Can this fill the deep pit of computing power?

Author: C Labs Crypto Watch

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

Total revenue reached $17.2 billion, up 22% year-over-year. Cloud business grew 44%. Uncompleted contract backlog (RPO) hit $553 billion, a 325% surge year-over-year. Oracle claims this is the first time in 15 years that both revenue and profit have grown over 20% simultaneously, and its stock price rose over 10% after hours.

But in the same week, another set of news also circulated:

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

A private credit institution refused to finance Oracle’s $10 billion 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 within the same timeframe.

1. Oracle’s Financial Problems

First, free cash flow is negative—and significantly so.

Over the past 12 months, Oracle’s free cash flow was negative $13.18 billion. Operating cash flow was positive $2.35 billion, but capital expenditures ate up even more—this year’s full-year capex guidance is $50 billion, more than seven times what it was two years ago. Revenue is growing, but so is cash burn.

Second, debt continues to expand.

This quarter, Oracle raised another $30 billion through investment-grade bonds and convertible preferred stock, bringing total debt to over $100 billion. The footnotes in the financial report reveal an even larger figure: $248 billion in off-balance-sheet lease commitments. That means Oracle owes over $100 billion in loans, plus $248 billion in long-term leases signed for over a decade—these obligations are incurred but not yet paid.

Oracle promised during the earnings call that it will not issue new debt in the 2026 calendar year. They publicly stated, “No more borrowing this year”—which is a significant message: creditors are already uneasy, and Oracle has to come out to reassure.

Third, data centers are built, but chips become outdated immediately!

The $553 billion RPO is the most eye-catching figure in the report, up 325%. But Oracle explained during the call that most of these contracts come from customers prepaying for equipment or bringing their own GPUs for Oracle to operate.

In plain language: Oracle is increasingly acting as an “operator” rather than building data centers with its own capital to lease out. This shift reduces asset and liability pressure but also means Oracle is no longer a heavy-asset, high-margin infrastructure owner but has become more like a property management company for computing power—similar to a digital version of Wanda Commercial Properties. Meanwhile, Oracle’s biggest customer, OpenAI, has canceled its expansion contract for a data center in Texas.

The reason is that Oracle’s chips are Blackwell, but NVIDIA’s next-generation Vera Rubin has five times the inference performance of Blackwell. OpenAI doesn’t want to be tied to infrastructure that’s about to become obsolete. Data center construction cycles are 12 to 24 months, but chip refresh cycles have been compressed to 12 months by Jensen Huang—built and outdated almost immediately. This contradiction has no simple solution. For Oracle, which focuses on data center business but doesn’t control chip manufacturing, this is a huge pitfall.

2. “Replacing People with AI”: Oracle’s Financial Self-Rescue Strategy

How to fill the financial gap? Oracle has found a politically correct answer: layoffs, justified by AI replacement.

Currently, Oracle employs about 162,000 people. A TD Cowen report estimates Oracle will lay off 30,000 employees, freeing up $8 to $10 billion in free cash flow—specifically to cover the funding gap caused by data center expansion.

The logic is straightforward: cut workers, save money, and use the savings to build AI-powered data centers.

3. Tech Giants Competing in Layoffs

Oracle is not alone. Any tech company heavily betting on AI and under cash flow pressure faces the same issue. “Replacing people with AI” offers a financially reasonable, narratively acceptable, and shareholder-friendly way out.

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

The bill for the AI arms race will ultimately be paid by someone.

But unexpectedly, it’s the workers who are footing the bill.

Related: Block layoffs nearly halved, soaring 24%! CEO: AI boosts efficiency, most companies will make similar adjustments in the coming year