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Cisco Systems announced plans to cut nearly 4,000 jobs as part of a strategic pivot toward artificial intelligence (AI), following a better-than-expected earnings report. The layoffs, which amount to under 5% of Cisco’s global workforce, triggered a roughly 20% surge in the company’s stock during after-hours trading.
Based in San Jose, Cisco explained that this workforce reduction aligns with its goal to focus investments on the highest-demand, highest-value areas as it embraces the AI era. CEO Chuck Robbins emphasized the necessity of difficult decisions to ensure the company’s future success.
Earlier in the day, Cisco reported third-quarter revenue of $15.8 billion, surpassing the $15.56 billion analysts anticipated. Adjusted earnings per share came in at $1.06, also exceeding expectations. The company’s year-over-year revenue grew 12% compared to the same quarter last year.
Cisco highlighted robust momentum in AI infrastructure orders, securing $5.3 billion from hyperscale customers so far this fiscal year. With continued growth, the company projects AI-related orders could reach $9 billion in fiscal 2026, up from a prior estimate of $5 billion. Corresponding revenue from AI segments is now expected to hit $4 billion, an increase from the previous $3 billion forecast.
Despite record revenue results, Cisco will begin notifying affected employees of layoffs starting May 14 as it transitions to prioritize growth areas including AI, security, and networking. The company plans to offer severance packages, extended training, and job placement support. Cisco reports that its internal and external placement programs have helped approximately 75% of participants find new employment.
The restructuring is expected to incur pre-tax charges of up to $1 billion, with around $450 million recognized in the upcoming quarter and the remainder spread into fiscal 2027. This move reflects Cisco’s commitment to reshaping its workforce and resources to lead in emerging technology markets.