Multiple banks have stopped offering loans! A well-known tech giant is reported to lay off 30,000 employees, causing a stock price decline.

On January 31, news reports, citing multiple foreign media outlets, indicated that TD Cowen, the investment bank under TD Securities, reported that Oracle is facing severe funding difficulties due to challenges in financing the expansion of its AI data centers. The company is considering measures such as large-scale layoffs and the sale of some business units to cope.

TD Cowen’s research report states that Oracle plans to lay off 20,000 to 30,000 employees, which is expected to free up $8 billion to $10 billion in cash flow. Furthermore, Oracle is also considering selling its healthcare software division Cerner, which it acquired for $28.3 billion in 2022.

Previously, Oracle signed an agreement with OpenAI to build data centers valued at $300 billion. TD Cowen estimates that Oracle will incur $156 billion in capital expenditures due to this deal, and its projected capital expenditure for 2026 has been raised by $15 billion to $50 billion, causing concern among investors.

In addition to building data centers for OpenAI, Oracle has also reached agreements with Meta and NVIDIA. The total investment scale for these data centers is up to $523 billion, with approximately 3 million GPUs required for procurement.

TD Cowen pointed out that currently, several US banks have stopped providing loans for Oracle-related data center projects. The firm added that banks in Asia seem to be more optimistic about Oracle, but the attitude of US banks raises doubts about whether Oracle can secure support from other major banks.

TD Cowen warned that both equity and debt investors are questioning whether Oracle has the capacity to fund this expansion project. The widening of Oracle’s credit default swap (CDS) spreads and the pressure on its stock and bond prices demonstrate this.

In September last year, Oracle issued $18 billion in bonds, but it is estimated that Oracle needs to borrow $25 billion annually to fund its expansion. As market skepticism deepened, Oracle’s fundraising difficulties increased. In the last few months of last year, Oracle’s five-year CDS price tripled, highlighting market vigilance.

According to a report by Yicai in December last year, sources revealed that Oracle has delayed the completion date of some data centers prepared for OpenAI from 2027 to 2028. The sources said these delays are mainly due to shortages of manpower and materials. Since signing the contract, Oracle has been working to complete a $300 billion deal to provide the computing power needed to train and operate OpenAI models. Despite the delays, the schedule for US projects remains ambitious, and these data centers are expected to be among the largest in the world.

In the secondary market, as of the close on January 30, Oracle’s stock price fell by 2.62%, closing at $164.58, with a latest market value of $472.9 billion.