Oracle raises restructuring bill to $2.8 billion amid AI spending push: Report
Oracle said restructuring costs linked to its cost-cutting plan will rise by about $700 million as the cloud company looks to control spending while investing heavily to meet strong demand for AI artificial intelligence services. The higher estimate, which came after the end of Oracle’s August quarter, takes the expected cost of its fiscal 2026 restructuring plan to about $2.8 billion. Oracle said its backlog stood at $664 billion. About half of that amount is expected to turn into sales over the next 36 months.
Oracle said some of the restructuring is linked to the growing use of AI across parts of the company. The company also said much of its newly contracted revenue will not require Oracle to provide all the money needed to build capacity. As stated in a Reuters report, the company disclosed the increase in a regulatory filing. As per the report, the plan includes job cuts, severance payments, contract terminations and other costs related to leaving certain operations. The cost-cutting plan comes at a difficult time for Oracle. Investors have been divided over the company’s AI strategy, with some betting on strong growth while others remain concerned about the large amounts of money Oracle is spending to expand its AI and cloud business. Strong first-quarter earnings and a better balance sheet have also helped Oracle shares recover after a period of weaker performance.
“Despite Oracle asking customers to partially fund the technical hardware to alleviate its cash flow pressure, we do not foresee Oracle’s cash flow profile changing anytime soon,” Morningstar analyst Luke Yang said as quoted in the Reuters report. Investors have questioned the cost of Oracle’s AI expansion and whether its traditional software business can continue to grow as AI changes the technology industry.