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AI companies are spending vast sums of money on data centers — infrastructure expenditures that come with some hair-raising price tags.
As Bloomberg reported last week, Larry Ellison’s Oracle may have spread itself a little too thin. The company is planning to cut thousands of jobs due to a “cash crunch” resulting from a massive AI data center expansion effort.
Inside sources told the outlet that at least some of the cut jobs will affect categories that will no longer be needed due to AI. Even job listings in its cloud division are reportedly being reviewed, indicating a serious downscaling effort.
A day after the story was published, Bloomberg subsequently reported that the company had ended its plans to expand its flagship AI data center in Abilene, Texas, after “negotiations dragged over financing” and its project partner OpenAI changed its mind on the matter.
The data center is part of president Donald Trump’s flagging $500 billion Stargate project, which was announced just weeks into his presidency early last year.
Oracle has since denied the reporting in a statement to Investing.com, stating that the facility is still on track and that OpenAI is still committed to the data center expansion. The reported job cuts, however, didn’t appear to warrant a reaction.
The drama highlights how even some of the most valuable companies in the world are struggling to keep up with enormous plans to meet the intense computing, electricity, and water demands of increasingly powerful AI models.
That’s despite investors being painfully aware that a return on their investments could be many years out. Oracle isn’t expected to go cash flow positive until at least 2030, Bloomberg found in its analysis.
Meanwhile, tech giants are continuing to accrue massive amounts of debt to fund their data center build-outs, raising major red flags on Wall Street. Oracle announced in February that it’s looking to add up to $50 billion in debt and equity sales this year alone.
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