Cisco to cut jobs so it can invest more in AI, and the stock rockets toward a record

Cisco Systems will lay off fewer than 4,000 employees—less than 5% of its workforce—and take a $1 billion pre-tax charge to fund severance and restructuring costs, CEO Chuck Robbins announced. The company attributed the move to strategic investments in silicon, optics, security, and AI adoption across its operations. Despite the layoffs, Cisco reported double-digit growth in its fiscal third quarter, ending April 25, with revenue rising 12% year-over-year to $15.8 billion, exceeding analyst expectations of $15.6 billion. The stock jumped 15.4% in premarket trading, positioning it for a fifth consecutive record close, following a 32.3% year-to-date gain. Cisco also raised its fiscal 2026 revenue guidance to $62.8–63.0 billion, up from $61.2–61.7 billion, citing strong AI infrastructure demand from hyperscalers. Analysts had projected $61.6 billion, and the company’s fourth-quarter revenue forecast of $16.7–16.9 billion also surpassed Wall Street estimates of $15.8 billion. Robbins emphasized that the layoffs were part of a broader shift to accelerate AI-related investments, aligning with trends seen at other tech firms like Meta, Cloudflare, and Block. The company highlighted record demand for its technology, particularly in the AI era, with earnings per share rising to $1.06 from 96 cents a year ago. Cisco’s adjusted EPS guidance for the fourth quarter, $1.16–1.18, also exceeded expectations of $1.08 per share. The restructuring follows a pattern of tech companies prioritizing AI expansion over workforce growth, despite strong financial performance. Cisco’s stock surge reflects investor confidence in its AI strategy, even as it navigates workforce reductions. The company’s focus on silicon, security, and AI tools positions it to capitalize on growing enterprise demand in the AI-driven economy.