Cisco's stock soared 15% in extended trading after the company reported quarterly earnings and revenue that exceeded Wall Street expectations and issued guidance above analyst forecasts [1]. For the quarter ended April 25, Cisco posted adjusted earnings per share of $1.06, surpassing the $1.04 expected, and revenue of $15.84 billion, ahead of the $15.56 billion consensus [1]. Revenue grew 12% year-over-year from $14.15 billion, while net income rose to $3.37 billion, or 85 cents per share, compared to $2.49 billion, or 62 cents per share, a year earlier [1].
Cisco announced it will cut fewer than 4,000 jobs this quarter, representing less than 5% of its workforce, as part of a strategic shift to focus on artificial intelligence (AI) opportunities [1]. CEO Chuck Robbins stated that the company is making 'hard decisions' to invest in areas with the strongest demand and long-term value creation, expressing confidence that Cisco will be a winner in the AI era [1]. Severance and related costs are expected to result in pre-tax charges of $1 billion, with $450 million recognized in the fiscal fourth quarter [1].
The company reported receiving $5.3 billion in AI infrastructure and hyperscaler orders so far this year and raised its expected AI orders for the fiscal year to $9 billion, up from $5 billion previously [1]. Cisco now anticipates $4 billion in AI-related revenue for the fiscal year, an increase from its prior projection of $3 billion [1]. For the fiscal fourth quarter, Cisco guided for adjusted earnings per share of $1.16 to $1.18 on revenue of $16.7 billion to $16.9 billion, well above analyst expectations of $1.07 EPS and $15.82 billion in revenue [1].
Cisco's networking revenue jumped 25% to $8.82 billion, beating the $8.47 billion analyst consensus, while security revenue remained flat at about $2 billion [1]. The company also introduced new switches and routers powered by its next-generation processor and launched a leaderboard for ranking generative AI models based on cybersecurity robustness [1]. Cisco's stock has gained 33% this year, outpacing the Nasdaq's 14% advance, and if after-hours gains hold, it would mark the sharpest rally since 2011 [1].
CONCLUSION
Cisco's strong quarterly results, robust AI order growth, and upbeat guidance drove a significant rally in its shares. The company's strategic job cuts and increased investment in AI signal a focused shift toward high-growth opportunities, positioning Cisco as a key player in the evolving AI infrastructure market.