Inside Oracle's Strategic Contradiction: Cutting 30,000 Jobs While Riding a 325% Backlog Surge

Oracle faces record $553B backlog and AI-driven growth but cuts 30,000 jobs; stock dips after Alphabet's $80B AI funding announcement.

Oracle heads into its fourth-quarter earnings report on June 10 straddling two starkly different narratives. The company is slashing roughly 18% of its workforce — some 30,000 employees — in the deepest layoffs in its history. Yet at the same time, it holds a record $553 billion in remaining performance obligations, a figure that has ballooned 325% year over year as demand for AI infrastructure swallows every available megawatt of computing capacity.

The stock has reflected that tension. After surging about 30% over the prior 30 days, Oracle shares retreated roughly 5% on Wednesday to trade at €199.26. The selloff was triggered by an unexpected external event: Alphabet announced an $80 billion equity offering to fund its own AI buildout, a move that investors read as a sign of intensifying competition for capital. Oracle fell more than 4% on June 2 alone.

Behind the stock’s gyrations lies a deliberate strategic pivot. The bulk of the job cuts — between 8,000 and 10,000 positions — are concentrated in the Oracle Health unit, the former Cerner business. Severance packages offer four weeks of pay for the first year of service plus one week for each additional year, capped at 26 weeks. Unvested stock options will be forfeited upon departure. The goal is to redeploy cash from traditional, labor-intensive operations into AI-integrated cloud services that are already delivering outsized returns.

Those returns were on full display in the fiscal third quarter. Total revenue climbed 22% to $17.2 billion, while cloud revenue surged 44% to $8.9 billion. The AI infrastructure segment alone posted a stunning 243% growth rate. CEO Clay Magouyrk confirmed that Oracle brought roughly 400 megawatts of data center capacity online in the last quarter and expects to exceed that figure in the current period. New facilities are rising in Wisconsin, Texas, Mexico, and Abilene as part of the Stargate AI infrastructure initiative. Capital expenditures for fiscal 2026 are budgeted at nearly $50 billion.

A separate headwind emerged on the security front. On June 1, the U.S. cybersecurity agency CISA flagged an actively exploited vulnerability in Oracle WebLogic Server, ordering federal agencies to apply a patch by June 4. Oracle shares slipped 1.44% that day, partially erasing a 10.4% gain from the prior session. Over the trailing month, the stock is still up roughly 30%, and the relative strength index has pulled back to 58, indicating the shares are no longer overbought.

Institutional demand has remained steady. CIBC Asset Management boosted its Oracle stake by 61.2% to approximately 426,700 shares, signaling confidence in the company’s long-term trajectory despite the near-term noise.

Wall Street is overwhelmingly bullish heading into the print. Consensus estimates put earnings per share at $1.96 on revenue of $19.1 billion, a roughly 20% increase from the year-ago period. Oracle itself has guided for EPS in a range of $1.96 to $2.00. Mizuho maintained its “Outperform” rating with a $320 price target and expects Oracle to accelerate revenue growth to 34% by fiscal 2027. Scotiabank holds a $290 target, while UBS recently raised its to $285 after partner and customer checks showed no signs of demand softening. Wedbush also reiterated “Outperform” with a $275 target.

The June 10 report will test whether Oracle can reconcile its massive investment cycle with the workforce restructuring now underway. With a $553 billion backlog as a buffer and analysts expecting another quarter of double-digit revenue growth, the company’s split-screen strategy may prove to be the defining theme for the second half of the fiscal year.