Oracle is giving investors another peek at the hood of the AI boom in its quarterly revenue report today. The company's stock has skyrocketed about 60% over the last year due to high demand for AI cloud services.
Despite rising revenue, Oracle is cutting jobs. Last month, there were hundreds of people in the US. There are also other leaders from AI Boom. Microsoft, Google and Meta are all reducing thousands of jobs this year. Also, “Improved AI Productivity” is sometimes touted as reducing staff needs, but there are also the huge amounts of money these companies have sunk into AI buildouts.
The best companies in the AI wave are also making some of the deepest cuts. No – It's not just for AI coding.
“I think what you're looking at with these layoffs is something like a strategic reorganization based on resource constraints,” said Eric Sufert, analyst at Mobile DEV Memos.
He said even the richest companies in the world must prioritize.
“The more attractive the opportunity, the more you want to pursue it,” Sufert said.
Even if it means sacrificeing other parts of the business. Oracle reduced its health department, cut Microsoft Cut Gaming, and Meta trimmed the Metaverse.
It's normal for businesses to pivot at new opportunities, but the cost of playing AI games is a whole new level.
“There's physical data centers, there's real estate, there's energy,” said Daniel Newman of Futurum Group.
Just before AI Frenzy, Google and Microsoft spent $2-30 billion a year on infrastructure. It's now 2-3 times that.
Next is the war for AI talent.
“So instead of hiring 1,000 workers a year, there's now one employee who's $100,000 to $100 million,” Newman said.
While the demand for AI is strong, there is no guarantee that this gambling will be rewarded, according to Sarah Myers West of the AI Now Institute.
“This costs so much, but they're changing other areas that include your own human resources,” West said.
Still, companies said last week that Meta plans to spend around $600 billion on AI infrastructure over the next few years.
