Cisco Restructures Business Around Artificial Intelligence Growth
Cisco announced a major restructuring plan on Wednesday as the company shifts its focus toward fast-growing artificial intelligence markets following a record-breaking third-quarter earnings report.
The networking giant said it expects to take approximately $1 billion in charges related to severance payments and other restructuring costs as part of the transition.
Cisco also confirmed that it plans to reduce its workforce by fewer than 4,000 employees during the fourth quarter of fiscal 2026, representing less than 5% of its total staff.
Cisco Raises Revenue Forecast After Strong Q3 Results
Following stronger-than-expected quarterly performance, Cisco increased its fiscal 2026 revenue guidance to between $62.8 billion and $63 billion. The company had previously forecast annual revenue in the range of $61.2 billion to $61.7 billion.
Cisco reported record third-quarter revenue of $15.8 billion, marking a 12% increase compared with the same period last year and surpassing analyst expectations of $15.54 billion.
The company’s adjusted net income for the quarter reached $4.2 billion, or $1.06 per share, up 10% year-over-year.
Shares of Cisco surged roughly 20% in extended trading following the earnings release and the improved outlook.
AI and Data Center Demand Drive Growth
Cisco continues to benefit from rising global investment in artificial intelligence infrastructure.
As technology companies expand AI data centers, demand for high-speed networking equipment has increased significantly. Cisco revealed that orders for its networking products jumped more than 50% compared with the previous year.
Data-center switching orders also climbed over 40%, highlighting strong demand for infrastructure supporting AI computing and cloud services.
Chief Executive Officer Chuck Robbins said Cisco’s strong quarterly results demonstrate the growing importance of its technology in connecting and securing AI systems.
According to Robbins, Cisco is positioning itself as a critical infrastructure provider for the AI era by leveraging its technology leadership and customer relationships.
Cisco Expects Billions in AI Revenue
During the company’s post-earnings conference call, Chief Financial Officer Mark Patterson stated that Cisco could generate at least $6 billion in AI hyperscale revenue during fiscal 2027.
Cisco noted that around $450 million of the restructuring-related charges are expected to be recognized during the fourth quarter of fiscal 2026, while the remaining costs will likely be recorded in fiscal 2027.
The company added that most of these restructuring expenses will be cash-based.
