On Wednesday, Cisco Systems announced impressive quarterly earnings alongside nearly 4,000 job cuts.
The dichotomy stemmed from the hardware and networking company’s embrace of a rapidly growing trend in tech: openly admitting that layoffs are due to AI adoption rather than poor performance.
“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,” Cisco CEO Chuck Robbins told employees in a publicly shared email. “I’m confident Cisco will be one of those winners. This means making hard decisions—about where we invest, how we’re organized, and how our cost structure reflects the opportunity in front of us.”
With his announcement, Robbins follows in the footsteps of tech leaders including Block CEO Jack Dorsey and Snap CEO Evan Spiegel, who made similar moves this year.
Robbins emphasized that the company will further invest in employees’ AI use throughout their jobs.
Meanwhile, employees will start getting notifications if they’ve been laid off on Thursday. Cisco says the job cuts make up less than 5% of its total workforce.
Shares of Cisco Systems Inc. (Nasdaq: CSCO) were up more than 16% on Thursday morning. The stock had already been trading at record highs this month.
How did Cisco perform during its third quarter?
Cisco reported $15.8 billion in revenue for the quarter ending on April 25. That figure represents a 12% jump year-over-year (YOY) and beats Wall Street’s predicted $15.56 billion, according to consensus estimates cited by CNBC.
The company also surpassed expectations of $1.04 earnings per share with $1.06 adjusted.
In a post-earnings call, Robbins highlighted AI-centric business with companies like Nexus and Nvidia, as well as a significant increase in revenue from AI. For instance, this quarter, Cisco shared plans to expand its secure AI factory with Nvidia.
Cisco’s product revenue rose 17%, something Robbins attributes to “robust demand for our AI infrastructure and campus networking solutions.”
Cisco expects its revenue to reach $16.7 billion to $16.9 billion in quarter four and $62.8 billion to $63 billion for fiscal year 2026. In comparison, it saw $56.7 billion in revenue for fiscal year 2025.