The tech sector’s long-running wave of workforce reductions shows no signs of slowing down. Salesforce (CRM) and Oracle (ORCL) have announced a new round of layoffs, affecting hundreds of employees in the United States and globally. The move is part of their restructuring plans amid growing focus on artificial intelligence (AI) offerings.
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On Thursday morning, ORCL and CRM stocks were up 3% and 2.5%, respectively.
Job Cut Details
Specifically, Salesforce plans to eliminate 262 positions in San Francisco and 93 jobs in Seattle and Bellevue, effective around November 3. The cuts come as CRM increases its focus on AI development and its AI-powered Agentforce platform, which automates customer support functions.
It must be noted that in early September, CEO Marc Benioff stated that the company had reduced its customer support workforce from 9,000 to 5,000, explaining that the company needed “less heads” due to the efficiencies of AI.
Meanwhile, Oracle has filed Worker Adjustment and Retraining Notification (WARN) notices to cut 254 roles in California and an additional 101 in Washington. The cuts have impacted a wide range of departments, including Oracle Cloud Infrastructure (OCI), Oracle Health (formerly Cerner), and other corporate divisions.
ORCL is reportedly trimming its cloud division to reduce costs and realign resources for its heavy investments in AI infrastructure.
Broader Industry Trend
These latest cuts add to a mounting number of tech layoffs since 2022. Companies like Microsoft (MSFT), Amazon (AMZN), and T-Mobile (TMUS) have also undertaken multiple rounds of layoffs this year, citing “over-hiring” during the pandemic and the higher costs of building AI infrastructure.
For instance, Microsoft has laid off 15,000 employees globally since May alone, even as it invests over $80 billion into AI initiatives.
Further, the job cuts coincide with companies’ increasing focus on cloud services and AI to compete with rivals such as Amazon Web Services (AWS) and Microsoft Azure. Thus, they are cutting roles that no longer fit their new strategic direction.
Is CRM a Buy, Sell, or Hold?
Turning to Wall Street, CRM stock has a Moderate Buy consensus rating based on 28 Buys, nine Holds, and one Sell assigned in the last three months. At $327.91, the average Salesforce stock price target implies a 31.31% upside potential.
Is Oracle a Buy, Sell, or Hold?
Overall, ORCL stock has a Moderate Buy consensus rating based on 23 Buys and 10 Holds assigned in the last three months. The average Oracle stock price target of $248 implies about 8.19% upside from current levels.
