Cisco posts record $15.8B quarter, then plans to cut nearly 4,000 jobs for AI pivot

Cisco Systems is moving deeper into artificial intelligence by trimming its workforce, even as it posted record results. The networking giant said it will cut close to 4,000 employees, less than 5 percent of its global headcount, as part of a restructuring announced alongside Q3 FY2026 earnings that topped Wall Street estimates.

Revenue reached $15.8 billion for the quarter, up 12 percent year on year and above the $15.56 billion analysts expected. Adjusted earnings came in at $1.06 per share against a $1.04 consensus. Shares rallied roughly 20 percent in after-hours trading on the print, even with the layoff news attached.

Where the money is going

The strategic logic is that demand from hyperscalers building out AI data centers is reshaping Cisco's product mix. The company said it has booked $5.3 billion in AI infrastructure orders so far this fiscal year and now expects roughly $9 billion for FY2026 as a whole, nearly double its earlier $5 billion target.

CEO Chuck Robbins framed the layoffs as the cost of repositioning, with new investment flowing into silicon and optics, security, and internal AI tooling for employees. The company is forecasting up to $1 billion in pre-tax restructuring charges and said it will offer severance, retraining resources, and placement services to affected workers, with notifications starting May 14.

A wider pattern

Cisco's move fits a pattern across large enterprise tech: cutting roles tied to legacy lines of business while expanding teams that ship AI infrastructure and security products. The bet is that hyperscaler capex remains durable and that customers will keep paying premium prices for networking, optics, and security gear tuned to AI workloads, an assumption that has so far been rewarded by the stock market.