Cisco shares surge as AI shift drives 4,000 job cuts

Cisco said on Wednesday it would cut nearly 4,000 jobs as part of a restructuring plan aimed at redirecting investment toward artificial intelligence and related growth areas, while also raising its annual revenue forecast following a surge in hyperscaler orders, News.Az reports, citing Reuters.

Shares of the San Jose, California-based networking equipment maker rose more than 17% in premarket trading on Thursday.

“The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest,” CEO Chuck Robbins said in a post on Cisco website.

The company said it is making strategic investments in silicon, optics, security, and employees’ use of AI across the organization, while reducing roles in certain areas as part of the restructuring.

Cisco has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year and has raised its full-year order expectation to $9 billion, up from a previous forecast of $5 billion.

The company is benefiting as firms increase spending beyond AI processors into the high-speed networking systems required to connect large data center infrastructures. Its networking product orders rose more than 50% in the third quarter compared with a year earlier, while data-center switching orders increased more than 40%.

Shares of the company have climbed 32% so far this year.

Cisco 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.

The company 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 said it will reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less than 5% of its total workforce. It had about 86,200 employees as of July 26.

The restructuring plan is expected to cost up to $1 billion, with about $450 million to be recognized in the fourth quarter and the remainder in fiscal 2027.

News.Az 

By Nijat Babayev