Oracle Stands Firm on OpenAI Partnership Amid Financial Turbulence
Oracle has issued a public defense of its strategic partnership with OpenAI following reports that the software giant might slash up to 30,000 jobs to finance its ambitious artificial intelligence infrastructure spending. The company's statement comes at a time of significant financial pressure and market skepticism about the sustainability of current AI investment models.
Oracle's Public Reassurance and Market Reaction
Through its official account on the social media platform X, Oracle declared that the stalled Nvidia-OpenAI investment deal has "zero impact" on its financial relationship with Sam Altman's company. The tech firm emphasized that it remains "highly confident in OpenAI's ability to raise funds and meet its commitments."
This clarification arrived after what industry observers described as a difficult weekend for OpenAI's partner network. Nvidia CEO Jensen Huang, speaking to reporters in Taipei following what local media termed the "trillion-dollar dinner," confirmed that his company would continue supporting OpenAI—though not at the previously rumored $100 billion scale. "No, no, nothing like that," Huang stated when questioned about the figure that had been circulating since September.
Wall Street's Skeptical Response
Rather than calming investor nerves, Oracle's reassurance triggered immediate market concerns. Minutes after the company's post went live, Oracle's stock began sliding, ultimately closing down 2.79% at $160.06. Venture capitalist Alex Kolicich captured the prevailing sentiment on X with his observation: "This is literally bank-run language."
The statement inadvertently highlighted how deeply Oracle has committed to artificial intelligence. The company has accumulated a staggering $58 billion in debt over just two months—$38 billion allocated for data centers in Texas and Wisconsin, with an additional $20 billion designated for a New Mexico campus. This brings Oracle's total debt beyond the $100 billion threshold. Since reaching its peak in September 2025, Oracle's market capitalization has been reduced by approximately half, erasing roughly $463 billion in value.
Potential Workforce Reductions and Financial Pressures
Investment bank TD Cowen reported this week that Oracle is considering significant workforce reductions affecting between 20,000 and 30,000 employees. These potential cuts would generate $8 to $10 billion in cash flow—funds the company urgently requires to fulfill a $300 billion OpenAI contract. TD Cowen estimates this agreement will demand $156 billion in capital spending and approximately 3 million graphics processing units.
Financial institutions are growing increasingly apprehensive about Oracle's position. Several US banks have quietly withdrawn from Oracle-linked data center projects. TD Cowen noted that interest rate premiums on Oracle debt have roughly doubled since September, and some planned data center leases have stalled after private operators failed to secure necessary financing.
Nvidia Confirms Investment Deal Was Never Finalized
The Wall Street Journal initially reported that Nvidia's proposed $100 billion investment in OpenAI had encountered significant obstacles, with some within the chip giant expressing reservations. Huang confirmed in Taiwan that the September agreement was non-binding and never reached completion. According to WSJ reports, Huang has privately criticized what he perceives as a lack of discipline in OpenAI's business approach and expressed concern about intensifying competition from Google's Gemini and Anthropic's Claude.
Separately, Reuters reported that OpenAI has been exploring alternatives to Nvidia's inference chips since last year. The ChatGPT creator has engaged in discussions with AMD, Cerebras, and Groq. Seven sources informed Reuters that OpenAI is dissatisfied with how rapidly Nvidia's hardware processes certain workloads, particularly those involving coding tasks.
Circular Financing Model Under Scrutiny
The current turbulence has drawn attention to the circular economics supporting the artificial intelligence boom. Nvidia invests in companies that subsequently spend those funds purchasing Nvidia chips. Oracle constructs data centers for OpenAI, then charges OpenAI for their utilization. This interdependent system functions smoothly until one participant slows down—at which point all parties experience the repercussions.
Sam Altman responded to the coverage with his own X post: "We love working with NVIDIA and they make the best AI chips in the world. We hope to be a gigantic customer for a very long time. I don't get where all this insanity is coming from."
Nevertheless, the financial challenges remain substantial. OpenAI has committed to approximately $1.4 trillion in compute, power, and infrastructure spending while generating just over $20 billion in annualized revenue. The company's strategy depends on continuous fundraising at escalating valuations. Amazon is reportedly negotiating to invest up to $50 billion in the current funding round, while SoftBank has already contributed $22.5 billion.
Oracle's Strategic Adjustments
Meanwhile, Oracle is implementing several strategic adjustments. The company now requires new customers to pay up to 40% of contract value upfront and is reportedly considering selling Cerner, the healthcare software unit it acquired for $28.3 billion in 2022. Oracle has not officially commented on the layoff reports circulating in financial circles.
The unfolding situation illustrates the complex financial interdependencies within the artificial intelligence sector and raises questions about the sustainability of current investment patterns as companies navigate unprecedented infrastructure demands and financial pressures.
