Cisco Cuts 4,000 Jobs Despite Record $15.8B Revenue to Fund AI Push

Quick Facts

• Cisco cuts nearly 4,000 jobs (5% of workforce) starting May 14 to fund AI investments
• Company reports record Q3 revenue of $15.8 billion, up 12% year-over-year
• AI infrastructure orders hit $5.3 billion year-to-date, exceeding $5 billion annual target

Cisco announced layoffs affecting nearly 4,000 employees despite posting record quarterly revenue of $15.8 billion. The networking equipment maker began notifying workers on May 14 as part of a strategic restructuring to increase AI investments.

The job cuts represent approximately 5% of Cisco’s workforce. CEO Chuck Robbins said the company must make “hard decisions” to win in the AI era.

“The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest,” Robbins wrote to employees.

Record Financial Performance

Cisco’s fiscal third quarter results exceeded expectations across key metrics. Revenue climbed 12% year-over-year to $15.8 billion, setting a company record. Non-GAAP earnings per share reached $1.06, up 10% from the prior year.

Product revenue drove growth at $12.1 billion, increasing 17% year-over-year. Networking revenue accelerated to 25% growth, fueled by AI infrastructure and campus networking demand.

Product orders surged 35% year-over-year, with networking product orders jumping more than 50%.

AI Infrastructure Boom

Cisco received $5.3 billion in AI infrastructure orders from hyperscale customers year-to-date, surpassing its original $5 billion annual target. The company raised its fiscal 2026 AI order target to $9 billion.

Third-quarter hyperscaler AI infrastructure orders totaled $1.9 billion, compared to $600 million in the prior year. Cisco expects to recognize approximately $4 billion in AI infrastructure revenue from hyperscalers in fiscal 2026.

CFO Mark Patterson indicated the company expects “at least $6 billion of AI hyperscale revenue recognition in FY2027.”

Restructuring Costs and Support

The workforce reduction will cost up to $1 billion in restructuring charges, primarily for severance expenses. Cisco expects approximately $450 million in charges during the fourth quarter, with the remainder in fiscal 2027.

Affected employees will receive pro-rated fiscal 2026 bonuses, one year of access to Cisco training courses and certifications, and placement services. The company’s placement program has helped 75% of participants find new roles.

Cisco shares rose roughly 20% in after-hours trading following the announcement. The company expects fiscal 2026 revenue between $62.8 billion and $63 billion.

Read more: Cisco cuts nearly 4,000 jobs to spend more on AI, reports ‘record quarterly revenue’