Cisco lays off 4,000 employees while doubling down on AI infrastructure

Cisco is cutting nearly 4,000 jobs as the networking giant ramps up spending on artificial intelligence, data center infrastructure, and hyperscaler demand that continues to surge across the tech industry. The company said affected employees will begin receiving notifications today, May 14, 2026.

The layoffs, announced Wednesday as part of a broader restructuring effort, come at a moment when AI spending is spilling far beyond Nvidia chips and into the networking hardware needed to connect massive AI systems. Investors cheered the shift. Shares of Cisco jumped more than 16% in extended trading after the company raised its annual revenue forecast and revealed stronger-than-expected AI infrastructure orders.

“We are making changes today that will result in the reduction of our overall workforce in Q4 by fewer than 4,000 jobs, representing less than 5 percent of our total employee base. Most notifications will begin on May 14 and continue globally in alignment with applicable local laws and regulations,” CEO Chuck Robbins said in a post on Cisco’s website.

“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,” Robbins said.

Cisco said it has secured $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year and now expects full-year AI-related orders to hit $9 billion, up from an earlier forecast of $5 billion.

That jump highlights a broader shift taking place across the AI economy. After an initial wave centered on graphics processors, spending is moving deeper into networking, optics, switching systems, and the physical infrastructure required to support large-scale AI workloads.

Ryan Lee, senior vice president of product and strategy at Direxion, said the market reaction had less to do with the layoffs and more to do with what the numbers revealed about hyperscaler spending.

“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,” Lee said, according to a report from Reuters.

Cisco appears to be benefiting directly from that shift. The company said networking product orders climbed more than 50% during the third quarter compared with a year earlier. Orders tied to data-center switching rose more than 40%.

The gains helped push third-quarter revenue to $15.84 billion for the period ending April 25, ahead of analysts’ expectations of $15.56 billion, according to LSEG data.

Cisco now expects fiscal 2026 revenue between $62.8 billion and $63 billion, above its previous forecast range of $61.2 billion to $61.7 billion.

On the company’s post-earnings call, Cisco’s finance chief, Mark Patterson, said it is “reasonable” to expect at least $6 billion in AI hyperscale revenue during fiscal 2027.

The restructuring plan will affect fewer than 4,000 employees, representing less than 5% of Cisco’s workforce. The company had roughly 86,200 employees as of July 26.

Cisco said the restructuring could cost as much as $1 billion. About $450 million of that is expected to be recognized in the fourth quarter, with the remainder extending into fiscal 2027.

Cisco’s layoffs come amid a broader wave of tech job cuts tied to the AI transition reshaping Silicon Valley. Reuters also reported on Wednesday that Microsoft-owned LinkedIn planned to cut about 5% of its workforce as tech companies continue shifting resources into AI and automation.

The move also adds Cisco to a growing list of tech companies reshaping their workforce around AI priorities. Across Silicon Valley, companies are redirecting spending away from slower-growth divisions and into infrastructure, automation, and AI-related operations as competition intensifies.