Cisco plans to cut nearly 4,000 jobs as part of a major restructuring initiative aimed at accelerating investments in artificial intelligence, hyperscale networking, silicon, optics, and cybersecurity technologies.
The workforce reduction, representing less than 5 percent of Cisco’s global employee base, comes as the company reported record third-quarter fiscal 2026 revenue and sharply increased its AI infrastructure outlook.
Cisco said the restructuring plan associated with the workforce reduction is expected to cost up to $1 billion. Around $450 million of the charges will be recognized during the fourth quarter of fiscal 2026, while the remaining costs will be incurred during fiscal 2027.
As of July 26, Cisco employed approximately 86,200 people globally.
Cisco’s 2026 layoffs followed a major restructuring in February 2024, when the company announced plans to eliminate about 4,200 jobs, or roughly 5 percent of its global workforce. At that time, Cisco said it was shifting resources toward high-growth areas such as AI and cybersecurity while managing softer demand in some legacy networking segments.
In 2025, Cisco continued smaller targeted workforce reductions, particularly in California. Reports indicated that more than 150 positions were cut across locations including Milpitas and San Francisco, with affected roles spanning engineering, support, and business operations. These cuts came even as Cisco reported improving financial performance driven by AI infrastructure demand.
The San Jose-based networking giant reported third-quarter revenue of $15.84 billion for the quarter ended April 25, 2026, representing a 12 percent increase. Cisco’s strong quarterly performance was fueled by rising hyperscaler demand for AI-ready networking infrastructure, accelerating enterprise campus upgrades, and expanding cloud data center investments.
Chair and CEO Chuck Robbins said Cisco is strategically reallocating investments toward areas that offer long-term growth potential in the AI era.
According to Robbins, companies that succeed in the AI-driven technology cycle will be those capable of rapidly shifting investments toward high-growth markets while maintaining operational discipline. Cisco said it is increasing investments in AI-focused technologies including custom silicon, high-speed optics, security platforms, and AI-enabled internal productivity systems.
AI infrastructure emerged as Cisco’s fastest-growing business opportunity during the quarter. The company revealed that year-to-date AI infrastructure orders from hyperscaler customers reached $5.3 billion, prompting Cisco to raise its fiscal 2026 AI infrastructure order forecast to $9 billion, up sharply from the earlier projection of $5 billion.
Cisco also increased its AI-related revenue forecast for fiscal 2026 to $4 billion, compared with the previous estimate of $3 billion. On the earnings call, CFO Mark Patterson said it is reasonable to expect at least $6 billion in AI hyperscale-related revenue during fiscal 2027.
The company continues to benefit from a broader shift in enterprise and cloud spending patterns, where investments are expanding beyond AI processors into networking systems needed to connect large-scale AI clusters and data centers.
Cisco reported that networking product orders surged more than 50 percent during the third quarter, while data center switching orders climbed over 40 percent. Campus networking orders increased more than 25 percent as enterprises accelerated refresh cycles for next-generation networking infrastructure.
Total product orders increased 35 percent year over year, or 19 percent excluding hyperscaler customers, highlighting broad-based demand across enterprise, cloud, and service provider markets.
Product revenue rose 17 percent during the quarter, driven primarily by networking growth of 25 percent. Observability revenue increased 3 percent, while collaboration revenue declined 1 percent and security revenue remained flat.
Cisco posted net income of $3.4 billion, up 35 percent.
The company maintained strong profitability despite increased AI investments. Gross margin reached 63.6 percent. Operating income climbed 24 percent to $4.0 billion.
Cisco also raised its full-year fiscal 2026 guidance. The company now expects annual revenue between $62.8 billion and $63.0 billion, compared with its earlier forecast range of $61.2 billion to $61.7 billion.
For the fourth quarter of fiscal 2026, Cisco expects revenue between $16.7 billion and $16.9 billion.
BABURAJAN KIZHAKEDATH
