TD Cowen estimated that Oracle’s OpenAI deal could require $156 billion in capital spending, with layoffs potentially freeing up $8-10 billion in free cash flow.

The bank’s research note suggested that, in addition to potential job cuts, Oracle could sell its health unit Cerner to support the financing of its AI data centre endeavours. It said finding equity and debt investors are questioning how Oracle plans to finance its data centre building programme to support its US$300 billion five-year contract with OpenAI.

It said: “both equity and debt investors have raised questions about Oracle’s ability to finance this build-out as demonstrated by widening of Oracle credit default swap (CDS) spreads and pressure on Oracle stock/bonds.”

TD Cowen also said US banks had pulled back from Oracle-linked data centre project lending, while private operators leasing to Oracle were struggling to secure financing

Oracle has been building large AI data centres rapidly, including its 4.5-gigawatt (GW) initiative with OpenAI. Taking place in Abilene, Texas, the upcoming AI data centre will use Nvidia GB200 GPUs for advanced AI training, in addition to featuring liquid cooling technologies.

TD Cowen has estimated the OpenAI build-out alone would require roughly three million GPUs and other IT equipment. Oracle is also building for Meta and Nvidia in a total commitment worth $523 billion.

Oracle sent shockwaves through the global tech markets at the end of last year, as its shares tumbled over 10% after its results missed revenue expectations. The company has accrued significant debt over its AI build outs, raising questions over if heavy investments will gain good enough returns to justify financial risk.

The company said 2026 would be a pivotal year for advancing AI in the US and Oracle would be playing a key role.

“We’re building the AI infrastructure needed to unlock new cures for diseases, enable scientific breakthroughs and drive significant economic growth,” the company said via its online blog in January. “Already, we have AI infrastructure projects underway … they are playing a critical role in our country’s future, fortifying American leadership in AI for generations to come.”

The news also comes amid job cuts peaking again in the technology sector, with Amazon confirming a new wave of global job cuts, in addition to Ericsson, Meta, TCS as each company looks to streamline processes and prioritise AI.

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