Cisco Systems to Lay Off 4,000 Employees Amid AI Shift
Cisco Systems is set to reduce its workforce by around 4,000 employees, which is less than 5% of its total global staff. This decision comes as part of a larger strategic pivot toward artificial intelligence (AI) and follows positive financial results released Wednesday.
Following the announcement, Cisco’s shares saw a notable increase of about 20% in after-hours trading. The San Jose-based firm indicated that this realignment aims to focus investments on high-demand areas, particularly those aligned with AI technologies.
“We’re optimistic that Cisco will emerge as a leader in this space, even if that means making some tough choices,” remarked Cisco CEO Chuck Robbins.
In the Bay Area, around 200 employees will be affected as the tech giant shifts its focus while nearby firms like Meta invest heavily in AI infrastructure.
Robbins noted, “We are initiating a workforce reduction of fewer than 4,000 employees this quarter, which is less than 5% of our total workforce.”
This news surfaced shortly after Cisco reported its third-quarter profits for 2026, which surpassed Wall Street’s expectations significantly. Revenue reached a record $15.8 billion, surpassing the anticipated $15.56 billion. Adjusted earnings per share stood at $1.06, slightly better than the expected $1.04.
The year-over-year growth was impressive, too, with sales increasing 12% from $14.15 billion during the same period last year. Moreover, Cisco has secured $5.3 billion in AI infrastructure orders from major clients since the start of the year. If this trend continues, the company predicts that AI orders could reach around $9 billion for fiscal 2026, a bump from its earlier $5 billion estimate. They’re also expecting a revised revenue forecast of $4 billion for this division, up from an initial $3 billion.
Despite these record earnings, the company announced that it will notify employees globally about the layoffs beginning May 14. Cisco is restructuring to emphasize growth areas like AI, security, and networking.
For those affected, Cisco plans to offer support through generous severance packages, extended training resources, and job placement assistance programs. These initiatives have reportedly helped about 75% of participants find new positions.
The overall restructuring plan is estimated to incur pre-tax charges of up to $1 billion. Cisco anticipates recognizing around $450 million of these costs in the next quarter, with the rest expected to roll out into fiscal 2027.
