Cisco to cut thousands of jobs as CEO signals ‘hard decisions’ in AI race

Cisco Systems announced plans to eliminate nearly 4,000 jobs as part of a restructuring effort to prioritize artificial intelligence, security, and networking. The move comes after the company reported stronger-than-expected Q3 FY2026 earnings, with revenue hitting a record $15.8 billion—exceeding analyst projections of $15.56 billion—and adjusted earnings per share of $1.06, up from $1.04 expected. Year-over-year revenue growth reached 12%, rising from $14.15 billion in the same quarter last year. CEO Chuck Robbins stated the layoffs, representing less than 5% of the global workforce, are necessary to position Cisco for long-term success in the AI era. The company has already secured $5.3 billion in AI infrastructure orders from hyperscalers year-to-date, with expectations to reach $9 billion in FY2026 if current momentum continues. Revenue projections for the AI segment were revised upward to $4 billion, up from an earlier estimate of $3 billion. Workforce notifications will begin May 14, with affected employees receiving severance, extended training, and job placement assistance through Cisco’s internal and external programs. The restructuring plan, including severance costs, is expected to result in pre-tax charges of up to $1 billion, with $450 million recognized in the following quarter and the remainder in fiscal 2027. Despite the layoffs, Cisco’s stock surged roughly 20% in after-hours trading following the earnings report. The company emphasized its commitment to supporting displaced employees while refocusing resources on high-growth areas to maintain its competitive edge in the evolving tech landscape.