Cisco Cuts 4,000 Jobs on Record $15.8B Quarter, Doubles AI Orders Forecast to $9B
Cisco posted record revenue and simultaneously announced its second major round of layoffs in two years, redirecting headcount savings into AI silicon, optics, and security infrastructure.
Cisco reported record Q3 FY2026 revenue of $15.8 billion on May 14 — beating the $15.56B consensus — while simultaneously announcing approximately 4,000 job cuts. Notifications to affected employees began the same day. The layoffs represent less than 5% of the workforce, but they land while the company is printing its best numbers ever.
The financials
EPS came in at $1.06, ahead of the $1.04 estimate. Full-year revenue guidance was raised to a range of $62.8B–$63B, up from the prior guidance of $61.2B–$61.7B. The restructuring carries a cost of up to $1 billion — roughly $450 million hitting Q4 FY2026, the rest spilling into FY2027.
The number that matters most for the industry: Cisco raised its AI infrastructure order forecast from $5 billion to $9 billion for the full year. Year-to-date AI orders from hyperscalers already stand at $5.3B. That figure alone is the thesis for the restructuring.
Where the money is going
CEO Chuck Robbins has been explicit: savings from headcount reductions fund reinvestment in silicon, optics, AI-driven security platforms, and internal AI tooling. Cisco is repositioning from being a networking equipment vendor to being the AI networking infrastructure company — the hardware and software that connects AI compute clusters at scale.
Ethernet-based AI cluster networking is a strategic battleground. Cisco is competing directly with Infiniband-centric solutions like NVIDIA’s Spectrum-X and custom merchant silicon from hyperscalers. The bet is that its customer relationships, software stack (Meraki, Catalyst, ThousandEyes), and optics portfolio give it a durable edge as AI data center builds accelerate.
The pattern
This is the second significant layoff cycle at Cisco in two years. In February 2025, the company cut roughly 3,000 roles, also citing AI reinvestment. The combination of record revenue plus job cuts is no longer unusual in enterprise tech — it’s the template. You hit new revenue highs on demand for AI infrastructure, then redirect labor spend into the machinery that drives that demand.
For Cisco, the logic is clearer than most. Its core enterprise networking business generates reliable cash flow. The restructuring isn’t distress — it’s a controlled pivot toward the segment where it sees 10-year growth.
What this means for the market
The $9B AI orders forecast makes Cisco one of the largest disclosed beneficiaries of AI infrastructure build-out outside of GPU vendors. Hyperscalers need more than GPUs: they need high-bandwidth, low-latency interconnects at scale. Cisco is writing itself into that bill of materials, and the earnings suggest it’s working.
The 4,000 people being let go are the price of that transition. Whether the pivot delivers long-term jobs growth is a question the company won’t be able to answer for another two to three years.