Cisco to cut nearly 4,000 jobs as AI restructuring boosts revenue outlook, hyperscaler orders

Cisco said Wednesday that it would cut nearly 4,000 jobs as part of a restructuring aimed at shifting investment toward artificial intelligence (AI) and related growth areas, while raising its annual revenue forecast following a surge in hyperscaler orders, reported Reuters.

“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 Chief Executive Officer Chuck Robbins said in a post on the company’s website.

Cisco shares rose more than 16% in extended trading, reported Reuters.

According to the report, the San Jose, California-based networking equipment maker said the layoffs would affect less than 5% of its global workforce and are expected to take place during the fourth quarter of fiscal 2026. Cisco will reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less than 5% of its workforce, it added. The company had around 86,200 employees as of 26 July.

Reuters reported that Cisco is making strategic investments in silicon, optics, security and employees’ use of AI across the company, while reducing roles in some areas.

The latest move follows earlier job cuts announced by Cisco over the past two years as the company streamlined operations and prioritised high-growth businesses, including AI, cybersecurity and cloud networking. In 2024, Cisco announced a restructuring that affected thousands of employees as it sought to improve operational efficiency amid weakening demand for some of its traditional networking products.

The company also raised its fiscal 2026 revenue forecast to between $62.8 billion and $63 billion, up from its previous guidance of $61.2 billion to $61.7 billion. Third-quarter revenue rose 12% year-on-year to $15.84 billion, driven by strong demand for networking equipment linked to AI data centres and cloud infrastructure expansion.

“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,” Ryan Lee told Reuters.

According to Reuters, the restructuring plan is expected to cost Cisco up to $1 billion, with about $450 million to be recognised in the fourth quarter and the remainder in fiscal 2027.

Cisco is among several technology companies increasing investments in AI infrastructure and automation.