Oracle stock climbs premarket amid plans for job cuts

Oracle saw its stock rise during premarket hours on Wednesday as the international tech giant plans to eliminate thousands of positions to release funds for building AI data center infrastructure.

The software company has begun notifying its 162,000 employees that thousands will be included in a fresh wave of job cuts, according to two sources familiar with the situation, who spoke to CNBC on Tuesday.

Its shares last saw a 2.6% rise in early market hours on Wednesday. Oracle chose not to respond to CNBC's report.

Investors are still concerned about the company's significant spending on data centers capable of supporting AI tasks.

Although the shares saw a nearly 6% increase on Tuesday, Oracle's stock is approximately 25% down this year so far.

In early February, the company shared its intention to raise as much as $50 billion during the 2025 calendar year through a mix of debt and equity to expand capacity for the anticipated cloud demand from clients such as Nvidia, Meta, OpenAI, Advanced Micro Devices, and xAI.

Leading AI technology companies like Alphabet, Microsoft, Meta, and Amazon have also pledged nearly $700 billion in capital expenditure for their AI projects this year, which worries investors due to the potential decrease in free cash flow and ambiguous near-term return prospects.

Oracle's job reductions are aimed at increasing cash flow, and Barclays analysts commented in a note on Thursday. The investment firm maintains an overweight rating on the stock.

"Given the company's current FY26 Restructuring Strategy and past announcements, today's layoffs do not come as a shock to the market, which may have been encouraged by the potential cost saving initiatives amid Oracle's aggressive expansion of AI infrastructure capacity," stated the analysts.

Barclays also pointed out that Oracle's profit per employee is lower compared to its peers, suggesting lower productivity levels than the industry average.

The analysts project Oracle's revenue to triple in the coming years due to modest headcount increases and controlled operating costs.