AI spending "under tremendous pressure", Oracle Corporation (ORCL.US) rumored to be laying off employees in its cloud department.

According to reports, Oracle Corporation (ORCL.US) is laying off employees in its highly watched cloud business division, the latest cost-cutting measure taken by the company amidst heavy investments in artificial intelligence (AI) infrastructure. Sources familiar with the matter revealed that affected employees were informed this week that their positions have been eliminated. Some layoffs are related to performance issues, but the department is still continuing to hire. According to two sources, over 150 employees have been laid off in the Seattle area, which has traditionally been a core region for Oracle Corporation's cloud business. Oracle Corporation announced last year that it would relocate its headquarters to Nashville, and currently, the company has more job openings in Tennessee than in any other state. An Oracle Corporation spokesperson did not respond to multiple requests for comment. The specific scope of the layoffs is still unclear. Many tech giants are trying to address the soaring costs of AI by cutting expenses in other business divisions. Microsoft Corporation has already laid off about 15,000 employees this year. Amazon.com, Inc. and Meta Platforms have also conducted layoffs. Due to the strong growth in cloud business, Oracle Corporation's stock price is close to its all-time high. Last month, the company signed an unprecedented agreement with OpenAI, through which OpenAI will lease around 4.5 gigawatts of data center power from Oracle Corporation, equivalent to the power supply for millions of American households. However, Oracle Corporation still needs to invest billions of dollars in building massive server clusters to meet the growing demand. In the fiscal year ending in May, its free cash flow was negative. In a filing submitted by Oracle Corporation in June, the company stated that it regularly adjusts its workforce due to strategic realignments, reorganizations, or performance issues. "Such restructuring actions have had an impact and may continue to have an impact in the future. During the period of employee adaptation to restructuring, restructuring costs increase, and productivity temporarily decreases." As of the close of the U.S. stock market on Wednesday, Oracle Corporation's stock fell by 3.81% to $244.18. The stock has risen nearly 48% since the beginning of the year.