Cisco Cuts 4,000 Jobs as AI Infrastructure Orders Soar to $9B

Cisco Systems revealed a paradox at the heart of its strategy: aggressive workforce reductions alongside explosive growth. The company said it would eliminate fewer than 4,000 jobs in the fourth quarter of fiscal 2026, with most employee notifications beginning Thursday, May 14. Yet the layoffs arrive as Cisco reported record third-quarter revenue of $15.8 billion, up 12% year-over-year, driven largely by surging demand from hyperscalers racing to build out artificial intelligence infrastructure. The restructuring, expected to cost up to $1 billion, reflects a calculated bet on where future growth lies. CEO Chuck Robbins said the company is "repositioning itself for the AI era" by cutting underperforming divisions while doubling down on high-growth segments. "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," Robbins wrote in a blog post. The numbers underscore that bet's potential scale. Cisco's AI infrastructure orders from hyperscalers reached $1.9 billion in the third quarter alone, up from $600 million in the same period last year. Year-to-date AI infrastructure orders have already hit $5.3 billion, prompting the company to raise its full-year FY26 forecast to approximately $9 billion—a 4.5-fold increase from fiscal 2025. The company also boosted its AI-related revenue target to $4 billion, up from a prior projection of $3 billion. But hyperscalers are only part of the story. Cisco reported triple-digit order growth in networking products during Q3, with enterprise demand broadening beyond cloud giants. Non-hyperscaler AI infrastructure orders from neocloud, sovereign, and enterprise customers totaled $300 million in the quarter and have generated a $3 billion pipeline. Enterprise orders for AI-tagged Nexus switches climbed nearly 50% sequentially, suggesting that corporate customers are beginning to invest in their own AI infrastructure at scale. Analysts view the restructuring as Cisco's answer to a shifting market reality. The company's traditional networking business remains robust—orders grew more than 50% in Q3, driven by service provider routing and compute gains—but the real value migration is happening in AI. Hyperscaler capital expenditure is expanding beyond semiconductor chips to encompass high-speed networking systems that connect massive data centers. Cisco is repositioning to capture that demand while shedding roles in lower-growth segments. Investor reaction suggested the market approved of the strategy. Cisco's stock rose 2.6% following the announcement, signaling that layoffs paired with robust forward guidance and a credible AI growth story outweighed near-term workforce reduction concerns. For a company that reported strong enterprise gains in data center switching, campus networking, and industrial IoT, the question now is whether Cisco can maintain broad-based growth while concentrating investments in AI-intensive segments.