The Insatiable Beast: Massive layoffs signal the extraordinary cost of the AI race

Oracle, a leading database software company, laid off 30,000 jobs without warning. In India, some re­ports claimed that 12,000 jobs had been eliminated and more rounds would follow. Contrast it with September last year when the company’s founder and Chairman Larry Ellison briefly became the richest man on Earth after a sudden 43 per cent jump in its stock price and you can see both the hopes and disruptions of artificial intelligence.

Oracle, a leading database software company, laid off 30,000 jobs without warning. In India, some re­ports claimed that 12,000 jobs had been eliminated and more rounds would follow. Contrast it with September last year when the company’s founder and Chairman Larry Ellison briefly became the richest man on Earth after a sudden 43 per cent jump in its stock price and you can see both the hopes and disruptions of artificial intelligence.

The September rise was because of great quarterly results and the company projecting huge revenues from AI. Now, Oracle needs to invest heavily in capital expenditure related to AI, and for that, other costs must be cut. Since Sep­tember, Oracle’s stock price have more than halved. After it cut the jobs, the market rewarded it with a small jump.

The cuts wouldn’t have been a shock if not for the scale and suddenness of them. Many other big conglomer­ates, including extremely profitable ones like Google and Meta, have been cutting jobs. The amount of investments required for AI infrastructure is getting too much for even such companies. Oracle, a hugely profitable com­pany, is deeply in debt now to the tune of over $100 billion. AI is turning out to be a bottomless stomach to feed as companies with the deepest of pockets compete with each other just to remain in the race. Only Nvidia has unquestioned market leadership, but even its valuations seem unreasonably high.

The feeling of an AI bubble about to burst gets stronger with time, and should that prick happen, these compa­nies will be floundering even more. Many more jobs will disappear even without the promised AI heaven where the technology actually begins to return its investments. And if the technology does fulfil its promise, that will still end up destroying jobs because of how it will replace the need for humans in the workforce. Anyway you look at it, joblessness seems a given. And most people, even if they are aware of the coming future, are helpless in adapting and repositioning themselves because it is simply out of their wheelhouse. After the joy of how AI will change the world, the reckoning of its impact is here now.