Oracle's Cost-Cutting Rally: 30,000 Job Losses and a $553 Billion Backlog Set the Stage for Q4 Earnings

Oracle's Q4 earnings preview: stock surges 26% ahead of June 10, 30k job cuts, $35B AI capex, $553B backlog - can margins hold?

Oracle enters the final stretch before its fourth-quarter earnings release on June 10 with a stock that has appreciated 26% over the past week and roughly doubled from its February trough of €115.82. The shares changed hands at €210.55 on Monday after a single-day jump of 9%, propelled by strong results from Snowflake and Dell that swept away fears of software cannibalization by artificial intelligence. With a market capitalization of roughly $722.6 billion and a 52-week high of €280.70 still 24% away, the company now faces a defining quarter: can it convert a staggering $553 billion backlog into scalable cloud revenue without letting margins slip?

The rally comes alongside aggressive cost-cutting. On June 1, Oracle shed 1,193 documented positions across California and Washington — 702 in the Golden State spread across Redwood City, Santa Clara, Pleasanton, and Santa Monica, and 491 in Washington covering offices in Seattle plus remote staff. Those layoffs, announced on April 1, are part of a far larger workforce reduction. The company is eliminating up to 30,000 jobs globally, or roughly 18% of its headcount, in the deepest restructuring in its history. Management has indicated that AI-powered code generation is enabling smaller development teams, and the goal is to free up $8 to $10 billion in annual cash flow for reinvestment.

That reinvestment is directed squarely at AI cloud infrastructure. Oracle’s cloud revenue jumped 44% to $8.9 billion in the third quarter, with Infrastructure-as-a-Service surging 84% to $4.9 billion. Total revenue climbed 22% to $17.2 billion. The company closed the quarter with remaining performance obligations of $553 billion — a 325% year-over-year increase, with the bulk coming from AI contracts. For fiscal 2026, Oracle is targeting $67 billion in revenue and $50 billion in capital expenditures. The following year’s revenue forecast stands at $90 billion, implying that the capex spending will continue to intensify. Management stresses that equipment is largely funded by customer prepayments or customer-owned GPUs, so no additional debt is needed.

Those spending ambitions are nonetheless eye-popping. Oracle expects to invest up to $35 billion in capex this year alone, with a cumulative total of as much as $275 billion by 2028. Analysts are watching closely whether the company can build data-center capacity fast enough to meet demand without compressing cloud margins. In the third quarter, net income rose 27% to $3.72 billion, but the high-margin software and SaaS business faces pressure as automation reduces headcount. The question is whether efficiency gains from job cuts can offset the cost of GPUs, real estate, and power.

The analyst community remains broadly optimistic. Of 44 brokerages covering Oracle, 34 assign a "Strong Buy" rating. Oppenheimer recently raised its price target to $235 and named the stock a top pick, citing robust AI bookings and anticipated savings from the layoffs. Yet the risks are real. The AI cloud division operates with relatively thin margins given the massive capital outlay, and Oracle’s single largest customer — OpenAI — has contributed a deal worth $300 billion to the backlog. Recent reports that OpenAI is missing internal growth targets have raised questions about the durability of that backlog, even as multicloud database revenue surged 531% and AI infrastructure revenue grew 243% year-over-year.

These growth rates set an extremely high bar for the coming earnings report. Oracle itself guided for fourth-quarter revenue growth of 19% to 21% and cloud revenue expansion of 46% to 50%, with earnings per share between $1.96 and $2.00. The stock’s recent run — up 26% year to date and 38% in the last 30 days — reflects a market that is betting the layoff-led efficiency drive will protect margins even as Oracle pours billions into AI data centers. The June 10 numbers will either validate that bet or force a reckoning.

At its core, Oracle’s strategy is a deliberate trade-off: sacrifice thousands of jobs to fund a once-in-a-generation infrastructure buildout, trusting that AI cloud demand will deliver long-term returns. The 30,000 job cuts are not a sign of distress — the company is profitable and cash-rich — but rather an offensive capital wager that the AI wave will be massive enough to absorb both the capex and the workforce reduction. For now, the market is giving management the benefit of the doubt. The next few quarters will test whether Oracle can keep all the plates spinning: record backlog, record capex, record layoffs, and a stock that has already priced in a great deal of success.