Cisco trims staff, pivots to AI

Cisco said on May 13 that it would cut fewer than 4,000 jobs as part of a restructuring tied to investment in artificial intelligence, security, silicon and optics. The move came the same day the company reported record fiscal third-quarter revenue of $15.8 billion for the period ended April 25, up 12% from a year earlier. Chief Executive Chuck Robbins told employees the company was reallocating resources toward areas where demand is growing faster, while telling investors that AI-related spending is broadening across customer groups. ### Why is Cisco cutting jobs after reporting record revenue? Cisco disclosed the restructuring in its May 13 earnings materials, saying the plan would let it invest in “key growth opportunities” including silicon, optics, security and AI. Business reports citing the company said the reductions would affect fewer than 5% of its workforce, or fewer than 4,000 employees, with notifications beginning that week. (newsroom.cisco.com) Chuck Robbins told employees in an internal message published on Cisco’s blog that the company was making changes despite strong results because it needed to align spending with where it sees future growth. Yahoo Finance, citing comments from CFO Mark Patterson, reported the move was about “realigning” resources rather than pursuing savings alone. ### What did Cisco say about AI demand? (prnewswire.com) Chuck Robbins said on Cisco’s earnings release that the company saw “very strong, broad demand” and raised its expectations for AI infrastructure from hyperscalers. Cisco said it had taken $5.3 billion of AI infrastructure orders year to date and increased its fiscal 2026 expectation to $9 billion from $5 billion. (blogs.cisco.com) Robbins also described the market as a “networking super cycle” driven by AI demand. Market coverage of his television interview said he pointed to rising demand from hyperscalers, enterprises, sovereign cloud projects and public-sector customers. ### Where is Cisco trying to win that business? Next Platform reported on May 18 that Cisco has been winning AI customers with merchant silicon and optics, adding detail to the company’s push beyond traditional enterprise networking gear. (newsroom.cisco.com) Cisco has highlighted Silicon One and high-speed optical products as part of the infrastructure needed to connect AI clusters and data centers. (finance.yahoo.com) CNBC reported after the earnings release that investors responded to those signals by sending Cisco shares sharply higher, after the company exceeded prior AI infrastructure expectations and lifted its outlook. Cisco’s quarterly results also showed product orders up 35% year over year, or 19% excluding hyperscalers, indicating demand outside the largest cloud buyers as well. (nextplatform.com) ### What does the restructuring say about Cisco’s priorities? Cisco’s own language in the restructuring notice named four focus areas: silicon, optics, security and AI. That list places the company’s spending behind the hardware and network-control layers that sit underneath enterprise AI deployments, rather than framing the shift around end-user software alone. (cnbc.com) MarketBeat’s summary of Robbins’ remarks said security is becoming embedded in the network as agentic AI spreads, and that Cisco sees network infrastructure itself as part of the control plane for those systems. That fits with the company’s recent emphasis on networking, security and observability products sold into enterprise and cloud environments. (prnewswire.com) ### What comes next for Cisco? Cisco said on May 13 that its fiscal fourth-quarter revenue is expected to be $16.7 billion to $16.9 billion, with full-year revenue projected at $62.8 billion to $63.0 billion. The company’s next formal update is expected with fourth-quarter results later in its fiscal calendar, when investors will look for progress on the restructuring and whether AI orders track toward the new $9 billion target. (finance.yahoo.com) (newsroom.cisco.com)