Cisco Plans to Lay Off Nearly 4,000 Employees, Accelerating AI Focus
Cisco Systems announced on Wednesday that it will cut nearly 4,000 positions (less than 5% of its workforce) as part of a broad restructuring plan aimed at strengthening investment in artificial intelligence and other high-growth areas. The announcement coincided with the release of the company's latest quarterly earnings, which showed accelerating AI demand, with total quarterly revenue reaching $15.8 billion, up 12% year-over-year. Cisco's Chief Financial Officer, Mark Patterson, stated that this restructuring is not for cost savings but to adapt to rapid technological changes and reallocate resources to key areas such as silicon, optics, security, and AI.
Quick Overview
- Cisco Systems announced on Wednesday that it will cut nearly 4,000 jobs—less than 5% of its workforce—as part of a broad restructuring aimed at focusing on artificial intelligence and other high-growth areas.
- The announcement came alongside Cisco's latest quarterly earnings, which highlighted accelerating AI demand. The company reported total revenue of $15.8 billion for the third quarter of fiscal 2026, which ended April 25, up 12% year over year. The company also reported $1.9 billion in AI infrastructure orders from hyperscale cloud providers during the quarter and expects such orders to total approximately $9 billion for fiscal 2026.
- "This is really not a cost-saving-driven restructuring," Cisco Chief Financial Officer Mark Patterson said on Wednesday's earnings call. "Technology is changing extremely rapidly right now, and this restructuring is more about reallocating resources to areas like silicon, optics, security, and AI."
In-Depth Analysis
The layoff move reflects a broader trend in the tech industry: companies are restructuring their workforces in response to shifting priorities driven by AI.
According to data released last week by outplacement firm Challenger, Gray & Christmas, U.S. tech companies announced 33,361 layoffs in April, bringing the industry's total for the first four months of 2026 to 85,411, up 33% year over year.
Cisco CEO Chuck Robbins said in a blog post on Wednesday that the company is reducing its workforce because rapid changes driven by AI are forcing the company to make "tough decisions."
"In the AI era, the companies that will win are those that have focus, urgency, and continuously shift investments to areas with the strongest demand and the most significant long-term value creation," Robbins wrote.
Layoff notices are expected to begin going out the day after the announcement. Robbins said the company will provide affected employees with prorated fiscal 2026 bonuses, career placement support, and one year of access to Cisco University courses and certifications.
Patterson also revealed on the earnings call that, as part of the restructuring, the company expects to incur pretax charges of up to $1 billion, with $450 million recognized in the fourth quarter of fiscal 2026 and the remainder in the following fiscal year.