Author: C Labs Crypto Watch

Today (March 10), Oracle released a financial report that received applause from Wall Street.

Total revenue reached $17.2 billion, a 22% year-over-year increase. Cloud business grew by 44%. Remaining order backlog (RPO) reached $553 billion, a staggering 325% year-over-year increase. Oracle claims this is the first time in 15 years that both revenue and profit have grown by more than 20% simultaneously, and its stock price rose more than 10% in after-hours trading.

But in the same week, another set of news was also circulating:

Several banks are quietly withdrawing from Oracle's data center projects;

A private lending firm has refused to finance Oracle's multi-billion dollar data center project.

Oracle is preparing to lay off tens of thousands of employees.

These two sets of messages came from the same company and occurred within the same time period.

01. Oracle's Financial Problems

First, the free cash flow is negative, and significantly negative.

Over the past 12 months, Oracle's free cash flow was negative $13.18 billion. Operating cash flow was positive at $23.5 billion, but capital expenditures consumed even more—full-year capital expenditure guidance is $50 billion, more than seven times that of two years ago. Revenue is growing, but cash burn is accelerating in tandem.

Second, the debt continues to expand.

This quarter, Oracle raised another $30 billion through investment-grade bonds and convertible preferred stock, bringing its total debt to over $100 billion. Hidden in the financial statement footnotes is an even larger figure: $248 billion in off-balance-sheet lease commitments. In other words, Oracle now owes over $100 billion in loans, and another $248 billion in long-term leases with terms exceeding a decade—money that hasn't been repaid, but is already incurred.

During a conference call, Oracle pledged that it would not issue any new debt in calendar year 2026. This public commitment to "not borrow any new money this year" carries significant weight: creditors are already uneasy, and Oracle has had to step in to reassure them.

Third, the chips expired as soon as the data center was built!

The $553 billion RPO is the most attractive figure in the entire financial report, representing a year-over-year increase of 325%. However, Oracle explained the source of these contracts during the conference call: most of the equipment was either purchased by customers with upfront payments or delivered to Oracle by customers themselves using GPUs.

In layman's terms, Oracle is increasingly acting as a "data center operator," rather than building and renting out data centers with its own money. This shift in business model has eased the pressure on its balance sheet, but it also means that Oracle is no longer a capital-intensive, high-profit computing power landlord, but rather a computing power property management company—essentially a data center version of "Wanda Commercial Management." Meanwhile, Oracle's largest customer, OpenAI, has canceled its expansion contract for its Texas data center.

The reason is that Oracle uses Blackwell chips, while Nvidia's next-generation Vera Rubin has five times the inference performance of Blackwell. OpenAI doesn't want to be tied to an outdated infrastructure. Data center construction cycles are 12 to 24 months, while chip upgrade cycles have been compressed to 12 months by Jensen Huang—the chips become obsolete as soon as they're built. There's no easy solution to this contradiction. This is a huge problem for Oracle, which focuses on data center business but doesn't control chip technology.

02. "Replacing Humans with AI": Oracle's Financial Self-Rescue Strategy

How to fill the financial hole? Oracle has found a politically correct answer in the current climate: layoffs, citing AI as a replacement.

Oracle currently has approximately 162,000 employees. A research report by TD Cowen estimates that Oracle will lay off 30,000 employees , which could free up $8 billion to $10 billion in free cash flow for Oracle—specifically to fill the funding gap caused by data center expansion.

The logic is very clear: lay off workers and use the money saved to build data centers that run AI.

03. Tech giants are scrambling to lay off employees, following suit.

Oracle is not an isolated case. Any tech company that has over-bet in this AI arms race and is under pressure on its cash flow faces the same bills. "Replacing humans with AI" provides a financially sound, narratively legitimate, and shareholder-acceptable solution.

Currently, North American giants such as Amazon and Meta are using this strategy, and the capital market welcomes it.

Ultimately, someone has to pay the bill for the AI arms race.

I never expected that it would be the working class who would foot the bill again.

OpenAI CEO获评《时代》杂志年度CEO

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