Cisco Systems revealed plans to cut nearly 4,000 jobs, representing less than 5% of its global workforce, as part of a strategic shift toward artificial intelligence (AI) following a stronger-than-expected earnings report for Q3 FY2026 [1]. The layoffs are set to begin with workforce notifications starting May 14 and are aimed at redirecting investment toward high-demand areas such as AI, security, and networking [1]. CEO Chuck Robbins stated, "I’m confident Cisco will be one of those winners. This means making hard decisions" [1].
The company reported record Q3 FY2026 revenue of $15.8 billion, surpassing Wall Street expectations of $15.56 billion, and adjusted earnings per share of $1.06 versus the expected $1.04 [1]. Year-over-year revenue growth reached 12%, up from $14.15 billion in the same quarter last year, which ended around April 26 [1]. Following the announcement, Cisco shares surged approximately 20% in after-hours trading [1].
Cisco also disclosed that it has secured $5.3 billion in AI infrastructure orders from hyperscalers year to date and, if current momentum continues, expects to generate about $9 billion in FY2026 AI orders, up from a prior estimate of $5 billion [1]. The company revised its FY2026 revenue projection for this segment to $4 billion, an increase from the previous $3 billion estimate [1].
The restructuring plan, which includes severance and related costs, is expected to result in pre-tax charges of up to $1 billion, with approximately $450 million to be recognized in the following quarter and the remainder in fiscal 2027 [1]. Cisco stated it will support affected employees with severance packages, extended training resources, and job placement assistance, noting that about 75% of participants in its placement services program have secured new roles [1].
CONCLUSION
Cisco's decision to cut nearly 4,000 jobs comes amid record earnings and a strategic pivot toward AI, signaling a significant transformation for the company. The market responded positively, with shares rising sharply after the announcement. The restructuring is expected to position Cisco for growth in high-value segments, particularly AI, while supporting affected employees through transition programs.