Cisco’s $1.9B AI Quarter Masks a Painful Pivot: 4,000 Jobs Cut, Record Revenue, and a Stock at Dot-Com Heights

Cisco shares soar to 52-week highs with 56% YTD gain, fueled by record AI infrastructure orders, even as the company cuts 5% of jobs to reallocate resources to high-growth areas.

Cisco shares have climbed to levels not seen since the dot-com bubble, closing Friday at €101.64 in Frankfurt — a fresh 52-week high and a year-to-date gain of 56%. But behind the euphoria lies a paradox: the networking giant is simultaneously posting record revenue and slashing nearly 5% of its workforce.

The third quarter of fiscal 2026 delivered a revenue beat that surprised even the most bullish analysts. Sales hit $15.84 billion, a 12% jump from a year earlier, and adjusted earnings per share came in at $1.06, ahead of Wall Street estimates. The engine driving that growth? A surge in AI infrastructure orders. The company booked $1.9 billion in AI-related contracts during the quarter alone, prompting management to raise its full-year AI order target to $9 billion.

CEO Chuck Robbins described the moment as a “supercycle” for networking equipment. Product orders across the board rose more than a third year over year, and the networking segment specifically posted a gain of over 50%. Yet those headline numbers obscure a sweeping internal restructuring. Cisco is cutting roughly 4,000 jobs — about 5% of its global staff — not as a cost-saving measure, but as a strategic reallocation of resources.

The freed-up capital will be redirected toward high-growth areas: artificial intelligence, silicon development, optics, and cybersecurity. The overhaul, however, comes at a price. Restructuring charges are expected to total up to $1 billion, with roughly $450 million hitting the current quarter. The company is willing to absorb that short-term pain in exchange for a sharper focus on the AI opportunity.

That focus is already visible in the upgraded full-year guidance. Cisco now expects fiscal 2026 revenue of $62.8 billion to $63.0 billion, up from its previous outlook. Shareholders, meanwhile, can count on a quarterly dividend of $0.42 per share, payable on July 22. The ex-dividend date falls on July 6, meaning investors need to hold the stock before that day to qualify for the payout.

Analysts have taken note. HSBC upgraded Cisco to “Buy” and lifted its price target to $137, citing a materializing AI pipeline. The broader market will get another test on May 26, when networking peer Zscaler reports its quarterly numbers — a report that could confirm whether the AI-driven surge Cisco describes is lifting the entire sector.

For now, the market appears willing to back Robbins’s bet. The stock is trading 55% above its long-term average, a level that underscores both the promise of AI and the high expectations the company must now meet.