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Oracle raises fiscal 2026 restructuring cost estimate to $2.8 billion
AI expansion pushes restructuring bill higher as Oracle focuses on controlling costs and cash burn
NEW DELHI: Oracle has raised its estimated cost for its fiscal 2026 restructuring programme by around $700 million to roughly $2.8 billion, as the technology giant looks to control expenses while expanding its artificial intelligence and cloud businesses.
The additional cost was disclosed in a regulatory filing on Friday following the end of Oracle’s August quarter. The restructuring programme includes employee severance, contract termination costs and other expenses linked to exiting certain activities.
Oracle said some of the measures are connected to the wider adoption of AI across parts of its business.
The higher restructuring bill comes as Oracle ramps up spending on AI and cloud infrastructure while investors remain focused on the cost and returns of the expansion.
Oracle shares initially rose as much as 7.8 per cent on Friday after the company’s revenue backlog increased by $26 billion. The stock later reversed its gains and closed around 2 per cent lower.
Oracle’s total backlog reached $664 billion, with about half expected to convert into revenue over the next 36 months. The company said much of the newly contracted business will not require it to finance the entire infrastructure build, as it is using customer prepayments and customers’ own chip supplies.
The update follows a strong first-quarter performance that helped ease some concerns around Oracle’s AI spending. However, analysts continue to assess how quickly the company’s cash generation can recover as it expands cloud capacity.
Oracle also faces financing and data centre profitability risks as component costs rise and opposition to new data centre projects grows in the US.
The company has said it plans to raise $40 billion through debt and equity during the current fiscal year. This includes a $20 billion stock sale completed during the first quarter.
Oracle reported negative free cash flow of $5.40 billion for the quarter. While the company remained in cash-burn territory, the figure was better than analysts’ average estimate of a $9.56 billion cash burn, according to LSEG data.
The increased restructuring estimate underscores the cost pressures facing Oracle as it seeks to capture growing AI and cloud demand while balancing infrastructure investment, profitability and cash generation.
