Networking equipment manufacturer Cisco announced plans to reduce its workforce by fewer than 4,000 employees, representing less than 5% of its total staff, as part of a strategy to increase investments in artificial intelligence (AI). Following the announcement, Cisco's stock surged nearly 20% in after-hours trading.
On May 13, during its quarterly earnings report, Cisco revealed its intention to cut the workforce in the fourth quarter of fiscal year 2026 (May to July). This decision aligns with the company's efforts to reallocate resources toward AI-related growth areas.
Chuck Robbins, Cisco's CEO, stated on the company’s website, "The companies that will win in the AI era will be those that have the discipline to continuously shift their investments toward areas of focus, urgency, demand, and long-term value creation."
Cisco explained that it is making strategic investments across various sectors, including silicon, optics, security, and employee AI utilization. The layoffs are seen as a restructuring effort to facilitate this shift in investment.
The company reported third-quarter revenue of $15.8 billion, slightly above the market expectation of $15.6 billion, according to LSEG data. The demand for AI infrastructure has also contributed to this positive outlook. Cisco noted that it has secured $5.3 billion in AI infrastructure orders from hyperscalers, which are companies operating large-scale AI data centers.
As a result, Cisco has significantly raised its overall AI infrastructure order forecast for the fiscal year from $5 billion to $9 billion. The revenue forecast has also been adjusted upward, with Cisco now expecting fiscal year 2026 revenue to be between $62.8 billion and $63 billion, higher than the previous estimate of $61.2 billion to $61.7 billion.
Following the earnings announcement, Cisco's stock showed a notable increase in after-hours trading, reaching $122.00, up $20.13 (19.76%) from the previous trading day, as of 9:59 AM KST on May 13.
* This article has been translated by AI.
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