Oracle (ORCL) shares ended lower on Sept. 15, although they have since bounced back, after the cloud giant reportedly initiated a fresh wave of job cuts across select divisions, with double-digit percentage layoffs expected in targeted teams.
Management now expects the 2026 restructuring plan aimed at reallocating capital toward artificial intelligence (AI) infrastructure to cost about $700 million more than its previous estimate of $2.1 billion.
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The announcement arrives as Oracle stock is struggling to regain momentum, currently down an alarming 40% versus its year-to-date high in early June.
www.barchart.comAre These Layoffs Bearish for Oracle Stock?
Oracle’s latest round of layoffs follows its massive 2025 plan that saw it eliminate roughly 21,000 roles, about 13% of its global workforce, bringing the total headcount down to about 141,000.
These job cuts aren’t distress-driven, though; management is using workforce optimization to pivot resources directly into high-growth AI and cloud infrastructure. Capital expenditures required to expand data centers remain substantial, compelling Oracle to aggressively contain operating expenses.
While cutting staff improves operating margins, which came in up 35 basis points in fiscal Q1, the upfront severance costs, restructuring expenses, and execution risks associated with fast-paced realignments continue to unsettle Wall Street investors in the near term.
Options Market Sentiment Remains Bullish
Despite Oracle’s negative free cash flow and expected restructuring costs, options market continue to recommend owning the AI infrastructure stock at current levels.
According to Barchart, the put-to-call ratio on contracts expiring mid-October sits at 0.42x, with a reading below 1.00x typically interpreted as a bearish skew. And the lower price on those options contracts is set at about $127, indicating potential for a 9.67% downside from current levels.
Oracle shares are currently trading at a forward price-to-earnings (P/E) multiple of about 22x, which looks rather attractive given the company is evidently benefiting from AI tailwinds.
How Wall Street Recommends Playing ORCL Shares
Crucially, Wall Street analysts believe the recent weakness in Oracle is uncalled for, and they recommend buying the stock at current levels.
The consensus rating on ORCL shares sits at “Strong Buy,” with the mean price target of about $247 indicating potential for a 75% rally from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.