Catenaa, Thursday, May 14, 2026- Cisco Systems stock jumped by the most since 2011 after the company delivered a better-than-anticipated sales forecast and announced plans to cut thousands of jobs.
Revenue will be $16.7 billion to $16.9 billion in the fiscal fourth quarter, which runs through July, the company said in a statement on Wednesday. Analysts estimated sales of $15.8 billion, according to data compiled by Bloomberg.
The news signaled that Cisco, a four-decade-old stalwart of Silicon Valley, is successfully pivoting to the AI economy. Orders from data center customers are accelerating, and the company’s restructuring plan is designed to further improve its position.
Cisco shares surged as much as 17% to a new intraday record of $119.36 after trading got underway in New York on Thursday, their biggest gain since August 2011. The stock had already increased 32% this year heading into Wednesday’s report.
The company’s layoffs will affect fewer than 4,000 jobs, or less than 5% of the total employee base, Chief Executive Officer Chuck Robbins said in a blog post.
“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,” he said.
“While we are reducing roles in some areas, we are making clear, strategic investments,” Robbins added. That includes spending on silicon chips, fiber optics, security, and the use of AI by its own employees, he said.
The reductions will result in as much as $1 billion in severance costs and other one-time expenses.
Cisco, the largest maker of networking equipment, is overhauling products and introducing new ones to better serve data center customers handling AI tasks. The changes are helping attract new clients, including ones overseeing government-led AI projects.
The San Jose, California-based company needs to add more types of its own networking chips and address cybersecurity risks raised by the move to AI, Chief Financial Officer Mark Patterson said in an interview. That includes securing AI agents and being able to observe how those agents and models perform, he said.
“We have a pretty expansive silicon portfolio today, actually, but we’re looking to grow it,” he said.
The AI shift is already showing a payoff. Cisco now expects to get $9 billion in orders from so-called hyperscalers, the largest operators of data centers, in fiscal 2026. That’s up from a $5 billion target previously.
Excluding some items, earnings will be roughly $1.16 to $1.18 a share in the fourth quarter, Cisco said. That range was well ahead of the $1.07 estimate.
In the fiscal third quarter, which ended April 25, sales increased 12% to $15.8 billion. Profit climbed to $1.06 a share, excluding some items. Analysts had predicted revenue of $15.6 billion and earnings of $1.04 a share.
Though AI networking has been a lucrative market for Cisco, it’s also one with growing competition. Rivals, including Broadcom and Hewlett Packard Enterprise, which acquired Juniper Networks, are vying for that business.
Shares of HPE and Arista Networks, another networking provider, both gained in late trading after the Cisco report.
