Cisco Lays Off 4,000 Workers Even as Revenue Hits Record on AI Demand

Cisco reports $15.84B quarterly revenue, cuts ~4,000 jobs to focus on AI, chips, and optics; raises full-year guidance amid surging AI orders.

Cisco Systems reported a quarterly revenue record of $15.84 billion and announced it would cut nearly 4,000 jobs on the same day — a pairing that underscores the company's aggressive pivot toward artificial intelligence infrastructure. The networking giant is simultaneously riding a surge in AI-related orders and reorganizing its workforce to focus on chips, optics, cybersecurity and data-center gear.

Revenue climbed 12% year over year in the fiscal third quarter, easily beating analyst expectations. Adjusted earnings per share of $1.06 also edged past the consensus forecast, while GAAP net income rose to $3.37 billion. The real eye-catcher, however, was product orders: they jumped 35% overall, and networking orders surged more than 50% as hyperscalers and enterprise customers raced to expand capacity for AI workloads. Within the networking segment, the Acacia Optics unit posted revenue growth of more than 200%.

The restructuring affects less than 5% of Cisco’s workforce. CFO Mark Patterson emphasized that the move is not about cutting costs but about shifting capital and talent into silicon, optics, security and AI — areas the company sees as central to its future. CEO Chuck Robbins described the backdrop as a “networking super-cycle” driven by AI demand, telling CNBC that the company aims for at least $6 billion in annual AI hyperscaler revenue by fiscal 2027. The reorganization carries a pre-tax cost of up to $1 billion, with roughly $450 million hitting the current quarter.

Cisco also raised its full-year revenue guidance to approximately $63 billion, up from a range that had been more than $1 billion lower. GAAP earnings per share for the year are now expected between $3.16 and $3.21. For the current quarter, management forecast revenue of $16.7 billion to $16.9 billion, well above the $15.8 billion analysts had penciled in, and adjusted EPS of $1.16 to $1.18, also topping consensus.

Analysts on Wall Street responded with a flurry of upgrades and price-target increases. HSBC raised Cisco from “Hold” to “Buy” and more than doubled its target to $137, with analyst Stephen Bersey calling the company’s AI role “structural” and likely to have a bigger financial impact than previously assumed. Morgan Stanley lifted its target to $120, Rosenblatt to $150, and KeyBanc to $125. Nineteen of the 26 analysts covering Cisco now rate the stock a buy.

The shares have already reflected the sentiment shift. At Friday’s close in Germany, Cisco traded at €101.64 — up 46% over the past month and roughly 57% year to date, with a market capitalization of about $467 billion and a price-to-earnings multiple of 38. The company has now beaten earnings expectations for four consecutive quarters.

On the AI order front, Cisco is targeting $9 billion in AI-related orders for the current fiscal year, of which $5.3 billion has already been secured from hyperscalers. The next big showcase for that strategy will be the Cisco Live conference in Las Vegas from May 31 to June 4, where management is expected to elaborate on its roadmap before thousands of customers and partners.