Cisco to cut thousands of jobs as CEO signals ‘hard decisions’ in AI race
Cisco's slated layoffs represent roughly 5% of the company’s global workforce. (David Paul Morris/Bloomberg via Getty Images)
Cisco Systems is planning to cut nearly 4,000 employees as part of a broader strategic shift toward artificial intelligence (AI), following a stronger-than-expected earnings report on Wednesday.
The layoffs, representing less than 5% of the company’s global workforce, sent shares up roughly 20% in after-hours trading.
The San Jose-based tech giant said the move reflects its strategy to position itself for the AI era by redirecting investment toward areas with the strongest demand and highest value.
"I’m confident Cisco will be one of those winners. This means making hard decisions," Cisco CEO Chuck Robbins said.
"With this, we are making changes today that will result in the reduction of our overall workforce in Q4 by fewer than 4,000 jobs, representing less than 5% of our total employee base."
Hours earlier, the company reported Q3 FY2026 earnings that significantly exceeded Wall Street expectations.
Revenue hit a record $15.8 billion, compared with $15.56 billion expected, while adjusted earnings per share came in at $1.06 versus $1.04 expected.
Year-over-year revenue growth reached 12%, rising from $14.15 billion in the same quarter last year, which ended around April 26.
Cisco also said it has secured $5.3 billion in AI infrastructure orders from hyperscalers year to date. If momentum continues, the company expects to generate about $9 billion in FY2026 AI orders, up from a prior estimate of $5 billion. FY2026 revenue from this segment is also projected to reach $4 billion, revised upward from a $3 billion projection.
Despite reporting record-breaking revenue, the company said it plans to issue workforce notifications starting May 14 across its global operations as it continues shifting focus toward high-growth areas such as AI, security and networking.
The company said it will support affected employees with severance packages, extended training resources, and job placement assistance through its internal and external placement services program, which reportedly helped roughly 75% of participants secure new roles.
Cisco will lay off nearly 4,000 employees amid company's AI push. (Photo Illustration Omar Marques/SOPA Images/LightRocket via Getty Images)
Cisco estimates that its restructuring plan, including severance and related costs, will result in pre-tax charges of up to $1 billion.
The company expects to recognize approximately $450 million of those charges in the following quarter, with the remainder to be recorded in fiscal 2027.