Cisco raises AI forecast as it cuts 4,000 jobs

Cisco Systems (CSCO) beat quarterly expectations, lifted its forecast for AI infrastructure orders and said it would cut fewer than 4,000 jobs, according to the company’s third-quarter earnings release and a note from chief executive Chuck Robbins.

The results landed as investors search for evidence that AI demand is spreading beyond the chipmakers that have driven the trade so far. Cisco, a mature networking supplier, is betting that it is.

Third-quarter revenue reached $15.8 billion, Cisco reported. Reuters separately said the company now expects fiscal 2026 revenue of $62.8 billion to $63 billion, above its earlier outlook. Cisco also raised its AI infrastructure order forecast to more than $9 billion for fiscal 2026. The revisions tie a near-term beat to a larger argument about where enterprise and hyperscale customers are directing their spending.

AI data-centre expansion needs more than processors. It also needs switches, routers and networking gear that move data between systems. CNBC reported the quarter showed continued demand for the hardware that connects AI workloads, a segment Cisco has been targeting as customers add data-centre capacity.

Robbins addressed the restructuring directly in his note. He wrote that the companies that succeed 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.” He added that this required “hard decisions” about where Cisco invests, how it is organised and whether its cost structure matches the opportunity ahead.

Part of those hard decisions is the job cuts. Cisco said fewer than 4,000 employees, or less than 5 per cent of its workforce, would lose their positions. The restructuring is expected to carry about $1 billion in pre-tax charges, Reuters reported. The company has been trimming headcount while redirecting capital toward security, networking and infrastructure products tied to AI demand — a signal of where management expects future growth, not just a cost-cutting exercise.

The updated guidance gives investors another figure to track. Reuters quoted chief financial officer Mark Patterson as saying it was “reasonable” to expect at least $6 billion of revenue from the AI hyperscale business in fiscal 2027. That turns order growth into a concrete revenue benchmark. Orders can capture enthusiasm and initial deployments. Revenue over the following year is a tougher gauge of whether the spending proves durable.

The next test is execution

Analysts cited by Reuters and CNBC have been tracking whether the demand that first lifted chip groups would also pull through to suppliers of network equipment and related infrastructure. Cisco’s higher order forecast suggests at least some of that demand is reaching a company better known for mature networking franchises than for the most prominent AI hardware names.

Management paired stronger AI guidance with another round of staff cuts, making clear it sees a need to hold costs down even as the order book improves. If AI-related orders continue to rise and the company hits its fiscal 2026 outlook, the restructuring will look like part of a longer shift in how legacy technology groups fund growth. Should demand soften or AI orders prove uneven, the cuts will leave investors asking whether the transition is moving faster on costs than on revenue.