Cisco has announced its plan to cut almost 4,000 jobs as part of a broader restructuring strategy focused on accelerating investment in artificial intelligence and related growth areas. The company also raised its annual revenue forecast after a surge in hyperscaler orders.
In premarket trading on Thursday, shares of the networking equipment maker rose more than 17% after the announcement.
"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.
Cisco said it is prioritizing strategic investments in silicon, optics, cybersecurity, and enterprise-wide AI adoption, while reducing roles in select business segments.
The company has secured $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year and has increased its full-year order expectation to $9 billion, up from the earlier projection of $5 billion.
"Though much will likely be made about a slight decrease in headcount, the post-market move we are seeing is truly the result of hyperscaler capex spilling downstream. This move validates that this capex is about more than just chips," said Ryan Lee, Direxion's Senior Vice President of Product and Strategy.
Cisco continues to benefit from rising enterprise and cloud spending on high-speed networking infrastructure needed to support large-scale AI workloads. During the third quarter, networking product orders grew more than 50% year-over-year, while data-center switching orders increased over 40%.
Shares of the company have risen 32% this year.
The workforce reduction, expected to take place in the fourth quarter, will impact fewer than 5% of Cisco’s global workforce. As of July 26, the company employed approximately 86,200 people worldwide.
Cisco said the restructuring initiative is expected to cost up to $1 billion, with nearly $450 million expected to be recorded in the fourth quarter and the remaining charges spread across fiscal 2027.
