MW Cisco to cut jobs so it can invest more in AI, and the stock rockets toward a record
By William Gavin and Hannah Pedone
Cisco says it will take a $1 billion charge related to its restructuring plans, to cover severance and other termination-related costs
Cisco Systems touted "double-digit growth" across both its top and bottom lines for its fiscal third quarter.
Cisco Systems stock was surging late Wednesday, after the networking giant said it would lay off workers and invest more heavily in artificial intelligence.
The company said it would recognize pre-tax charges of up to $1 billion, $450 million of which it will take in the current fiscal quarter, in the form of severance payments and other costs associated with its restructuring plans. Cisco $(CSCO)$ plans to lay off fewer than 4,000 people, or less than 5% of its workforce, CEO Chuck Robbins said in a letter to staff.
"While we are reducing roles in some areas, we are making clear, strategic investments - particularly in silicon, optics, security and in our employees' use of AI across the company," Robbins said.
The announcement makes Cisco the latest technology company to cite plans related to AI as it prepares for layoffs. A number of public companies have revealed they plan to lay off workers and lean more heavily on AI, including Meta Platforms (META), Cloudflare (NET) and Block (XYZ).
Read more: AI is coming for you job after all. These new announcements prove it.
Cisco's plans also come as the company touts "double-digit" percentage growth for both sales and profit for its fiscal third quarter, which ended on April 25.
"Our innovation pipeline is accelerating and our latest offerings across the portfolio are seeing some of the fastest adoption in our history," Robbins said on a call with investors on Wednesday. "This is translating to broad-based, record-high demand for our technology, which has never been more relevant to customers than it is in the AI era."
Cisco shares popped more than 17% in after-hours trading, into fresh record territory. That's after they were already up 32.3% year to date through Wednesday's close.
If the after-hours gains hold through Thursday's close, it would be the biggest one-day gain since it rocketed a record 24.4% on May 8, 2002.
Cisco reported revenue for the third quarter rose 12% from a year ago to $15.8 billion, while analysts tracked by FactSet were expecting $15.6 billion. It also posted adjusted earnings per share of $1.06, up from 96 cents a year ago and above analysts' projections of $1.03.
Cisco also guided for fiscal fourth-quarter revenue of between $16.7 billion and $16.9 billion, a more optimistic forecast than the $15.8 billion expected on Wall Street, according to FactSet. The company also guided for EPS of between $1.16 and $1.18, which would also be better than the $1.08 a share analysts had expected.
Cisco also raised guidance for the 2026 fiscal year to between $62.8 billion and $63.0 billion in revenue, up from its previous range of $61.2 billion to $61.7 billion, citing "significant momentum" and higher expectations for AI infrastructure from hyperscalers. Analysts had expected $61.6 billion.
See more: Big Tech's AI spending is depriving investors of juicy payouts
-William Gavin -Hannah Pedone
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May 13, 2026 17:42 ET (21:42 GMT)
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