Oracle cuts 21,000 jobs amid AI spending, faces $7 billion power collateral hurdle in Wisconsin

Author: Clay Halton Reading Time: 5 min

The race to dominate artificial intelligence is becoming one of the most expensive corporate contests in history.

Amazon, Microsoft, Google parent Alphabet, and Meta are expected to spend about $600 billion on AI infrastructure in 2026, according to Reuters. The historic spending spree is squeezing cash flow and putting pressure on companies to prove that their investments in chips, servers, and data centers will eventually pay off.

Oracle has made one of the biggest bets. The company has emerged as a major supplier of AI computing capacity after reportedly signing a $300 billion contract with OpenAI, but the data centers needed to fulfill that agreement have contributed to a cash crunch. Oracle subsequently pursued thousands of job cuts as it looked for ways to fund its expansion, Reuters reported in March.

By the end of its 2026 fiscal year, Oracle's workforce had fallen by approximately 21,000 employees, or 13%, from 162,000 to 141,000. The reduction came as Oracle restructured its business, partly in response to the adoption of AI within its operations.

Now, Oracle's weakened financial position could make it significantly more expensive to secure electricity for one of the data centers at the heart of its AI ambitions.

Wisconsin Regulators Want a $7 Billion Guarantee

Oracle is involved in a planned nearly one-gigawatt data center in Port Washington, Wisconsin, that is expected to help the company fulfill its OpenAI contract.

But the Public Service Commission of Wisconsin has declined to loosen financial safeguards designed to prevent residential electricity customers from bearing the costs if a massive data center fails or closes, according to the Financial Times.

Under We Energies' "very large customer" tariff, data center operators with an S&P credit rating below A- must provide collateral covering the power plants and transmission infrastructure constructed to serve them.

• Oracle was rated BBB, two notches below the threshold, when the requirements were considered.
• S&P subsequently downgraded the company to BBB-, leaving it one notch above junk status.
• The ratings agency cited Oracle's heavy AI spending and uncertain path toward generating enough profits from those investments.

As a result, Oracle could be required to provide more than $7 billion in cash or a letter of credit before the facility receives power. Maintaining that guarantee could cost the company more than $100 million annually.

Oracle has challenged the requirement in court, arguing that the added financing costs could discourage future investment in Wisconsin. The company said it remains committed to the approximately $15 billion project and would provide guarantees ensuring Wisconsin ratepayers are not exposed to its financial risks.

Regulators have held firm, stating that existing customers should not subsidize data centers "now or in the future."

The concern extends well beyond Wisconsin. At least 24 states have approved large-load tariffs containing special pricing, minimum contract terms, exit fees, or collateral requirements for data centers and other major electricity users.

Story continues