Cisco Restructures for AI Growth After Record Q3 Revenue

Cisco Systems (NASDAQ: CSCO) announced a major business restructuring focused on artificial intelligence and high-growth technology sectors after reporting record third-quarter revenue that exceeded Wall Street expectations. The strong earnings performance pushed Cisco shares up more than 20% in after-hours trading.

The networking giant revealed plans to cut fewer than 4,000 jobs in the fourth quarter of fiscal 2026, representing less than 5% of its workforce. Cisco expects to record a restructuring charge of approximately $1 billion related to severance and other expenses. Around $450 million of these costs will be recognized in Q4 fiscal 2026, while the remaining charges will extend into fiscal 2027. The company noted that most of the charges will be cash-based.

Cisco also raised its full-year fiscal 2026 revenue guidance to between $62.8 billion and $63 billion, up from its earlier forecast of $61.2 billion to $61.7 billion. The revised outlook reflects growing demand for AI infrastructure, cloud networking, and data center technologies.

For the third quarter, Cisco posted record revenue of $15.8 billion, marking a 12% year-over-year increase and beating analyst estimates of $15.54 billion. Adjusted net income reached $4.2 billion, or $1.06 per share, up 10% compared to the same period last year.

Demand for Cisco’s networking products remained strong as companies continue expanding AI data centers and investing in high-speed connectivity solutions. Networking product orders surged more than 50% year over year, while data-center switching orders climbed over 40%.

Cisco CEO Chuck Robbins said the results highlight the company’s critical role in the AI era, emphasizing its ability to provide secure and scalable infrastructure. During the earnings call, CFO Mark Patterson added that Cisco could generate at least $6 billion in AI hyperscale revenue in fiscal 2027, underscoring the company’s growing position in the artificial intelligence market.