Cisco to cut ~4,000 jobs to fund AI push; stock rockets to record

Cisco announced on May 13, 2026 that it will reduce its global workforce by roughly 4,000 positions—about 5% of staff—to reallocate resources toward artificial intelligence and other high‑growth areas, while reporting a strong third quarter and raising full‑year guidance. The move accompanies a restructuring intended to accelerate investments in silicon, optics, security and AI.

In the company’s Q3 fiscal 2026 results, revenue reached $15.8 billion, up 12% year‑on‑year; GAAP earnings per share were $0.85 and non‑GAAP EPS $1.06. Cisco said AI infrastructure orders from hyperscaler customers totaled $5.3 billion year‑to‑date and raised its FY26 expected hyperscaler order target to $9 billion from $5 billion, while lifting FY26 revenue guidance to $62.8–$63.0 billion. The company also estimated one‑time pre‑tax charges of up to $1 billion related to the restructuring.

Markets reacted strongly: Cisco shares jumped double digits in after‑hours trading and moved toward record levels as investors cheered the combination of better‑than‑expected results and an explicit strategic pivot to AI infrastructure. Real‑time quotes and market reports showed after‑hours gains in the mid‑teens to high‑teens percent range, reflecting investor confidence in the potential revenue lift from hyperscaler orders.

Strategically, the restructuring signals Cisco’s shift from primarily legacy networking toward capturing a larger share of the AI infrastructure stack. Management framed the changes as reallocation for growth rather than pure cost cutting, pointing to accelerating demand in data‑center switching and next‑generation campus networking as evidence the company can fund growth initiatives while maintaining cash returns to shareholders. Yet the near‑term impact will include restructuring charges and employee severance costs that could weigh on margins until efficiencies materialize.

Analysts say the near‑term outlook hinges on whether Cisco can convert elevated AI orders into sustained revenue and margin expansion. Key indicators to monitor are hyperscaler order flow, timing of restructuring charges and quarterly margin trends versus the upgraded guidance. If demand remains robust and execution holds, Cisco’s repositioning could drive further re-rating; if orders slow or execution slips, volatility in the stock is likely to continue.