Cisco shares soared 19.3% in premarket trading after the networking company issued results and guidance that topped Wall Street’s projections.
The company said it’s cutting its workforce this quarter by fewer than 4,000 jobs, representing less than 5% of total employees.
The company said it was making strategic investments in silicon, optics, security and employees' use of AI across the company, as it reduces roles in some areas.
Cisco has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year, and raised its full-year order expectation to $9 billion from $5 billion previously.
Cisco is benefiting as companies expand spending beyond AI processors to the high-speed networks required to connect large data-center systems. Its networking product orders grew more than 50% in the third quarter compared to a year earlier, while data-center switching orders rose more than 40%.
On a post-earnings call, Cisco's finance chief, Mark Patterson, said it is "reasonable" to expect at least $6 billion of revenue on the AI hyperscale side in fiscal 2027.
The company reported revenue of $15.84 billion for the third quarter ended April 25, beating analysts' average estimate of $15.56 billion, according to data compiled by LSEG.
It now expects fiscal 2026 revenue in the range of $62.8 billion to $63 billion, compared with its earlier forecast of $61.2 billion to $61.7 billion.
Cisco will reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less than 5% of its workforce. It had about 86,200 employees as of July 26.
The restructuring plan is expected to cost Cisco up to $1 billion, with about $450 million to be recognized in the fourth quarter and the remainder in fiscal 2027.
