Oracle plans to cut thousands of jobs and halts expansion plans with OpenAI

According to Bloomberg, Oracle and OpenAI have decided to terminate their flagship AI data center expansion project in Abilene, Texas. Additionally, Oracle is facing cash flow pressures due to massive AI infrastructure spending and is preparing to initiate large-scale layoffs. Oracle’s stock price has fallen more than 50% from its September 2025 high.

Oracle and OpenAI Texas Data Center Expansion Terminated

Bloomberg reports that Oracle and OpenAI’s plans to expand the Texas data center have ultimately fallen through.

The Crusoe data center in Abilene, Texas, is one of the most notable projects announced so far. Oracle has been rapidly deploying servers within the facility, which are used by OpenAI for training and deploying its products. Since mid-2025, Oracle, Crusoe, and OpenAI have been discussing increasing the data center’s capacity from 1.2 gigawatts to approximately 2.0 gigawatts. One gigawatt is enough to power about 750,000 homes, equivalent to a nuclear reactor’s output. However, due to delays in financing, changing demand, and cooling system stability issues, both parties ultimately decided to end the expansion agreement.

Oracle Capital Expenditure Rises and Financial Strain

To meet the computing power needs of clients like OpenAI, Oracle has invested heavily in building data centers. However, high capital expenditures have placed significant pressure on its finances. Wall Street estimates that these investments will turn Oracle’s free cash flow negative for several years, with returns not expected until 2030. To bridge the funding gap, Oracle plans to raise up to $50 billion through equity and debt issuance this year. The high costs have caused its stock price to drop over 50% from its September 2025 peak.

Oracle Plans to Lay Off Thousands of Employees

In response to financial pressures, Oracle plans to cut thousands of jobs and freeze hiring in its cloud division, with some positions reduced due to the adoption of AI systems. As of the end of May 2025, the company employed approximately 162,000 people worldwide.

This phenomenon reflects a broader trend in the tech industry: companies are reallocating budgets by expanding AI infrastructure while using AI to improve operational efficiency and reduce headcount. Previously, tech giants like Block also carried out large-scale layoffs to balance their budgets.

(Block slashed nearly half of its workforce to shift toward AI automation, causing its stock to soar over 22%)

This article about Oracle’s plan to cut thousands of jobs and the halt of OpenAI’s expansion was first published on Chain News ABMedia.