Shares of Cisco, the largest maker of networking equipment, surged a whopping 20% in after-market trade on Thursday after the company announced laying off nearly 4,000 employees as part of a restructuring aimed at shifting funds towards artificial intelligence (AI) related growth areas. The company also delivered a better-than-expected revenue forecast.
Shares of the California-based firm rose 19.76% in extended trading to $122. The stock has risen 34% in 2026 so far, as demand for AI-related stocks remains high in the global markets.
Cisco to lay off 4000 employees amid AI-led restructuring
Cisco projected that its fourth quarter revenue will be $16.7 billion to $16.9 billion, which beat Bloomberg analysts’ estimates of $15.8 million, underscoring growing orders from hyperscalers and the company’s pivot to the AI economy. The company posted a record revenue of $15.8 billion, up 12% year-over-year (YoY) in the third quarter.
The restructuring is further expected to boost the company’s position.
“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,” CEO Chuck Robbins said in a post on Cisco’s website.
The company’s layoffs will affect fewer than 4,000 jobs, or less than 5% of the total employee base, Robins said.
The reductions will result in as much as $1 billion in severance costs and other one-time expenses, suggested a Bloomberg report.
The CEO added that while the company is reducing roles in some areas, it is making clear, strategic investments – particularly in silicon, optics, security, and in our employees’ use of AI across the company. “These investments are building from a position of strength – and focusing on the technologies and businesses that will accelerate our growth, deliver unmatched innovation to customers and partners, and define our future.”
Cisco has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year, and raised its full-year order expectation to $9 billion from $5 billion previously, according to a Reuters report, signalling that the AI shift might already be paying off.
On a post-earnings call, Cisco’s finance chief, Mark Patterson, said it is “reasonable” to expect at least $6 billion of revenue on the AI hyperscale side in fiscal 2027, as per the report.
Vested Finance said that the number that actually moved the stock wasn’t the revenue beat, it was Robbins raising the FY26 AI infrastructure order target. “And the rationale below that it matters — hyperscaler orders grew triple-digits, with five of the top hyperscalers each growing triple-digits individually. You don’t see that kind of order strength unless something has genuinely shifted in the customer pipeline,” said the brokerage.
The AI trade so far has been narrow and expensive. But Cisco’s print is the first real evidence that the second-derivative names — switching, routing, optical interconnect are starting to put up numbers, not just stories, it added.
However, the stock is already up around a third this year and is trading north of 33 times earnings, which is rich by Cisco’s own history, Vested cautioned. “The AI tailwind is real, but it doesn’t make every other line of the P&L look pretty.”
Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.
