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Cisco just had its best quarter ever, and on the same day it announced those results, it also told nearly 4,000 employees they were out of a job while its stock jumped 17%.
Let's get into it.
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TODAY'S DEEP DIVE
Cisco's Best Quarter Ever Came With a 4,000-Person Layoff and a $9 Billion AI Bet
Cisco's fiscal third quarter, which ended April 25, 2026, was the best in the company's history. Revenue came in at $15.84 billion, up 12% from $14.1 billion a year ago, with networking revenue alone rising 25% to $8.82 billion.
Total product orders grew 35% year over year, and adjusted earnings per share of $1.06 cleared analyst expectations comfortably.
By every traditional measure, this was a blowout, and Wall Street responded by sending the stock up roughly 17% in aftermarket trading.
The AI Order Story
Cisco secured $5.3 billion in AI infrastructure orders from hyperscalers through the first three quarters of its fiscal year, a number strong enough that it raised its full-year AI order target from $5 billion all the way to $9 billion.
Nearly doubling a full-year target in May signals that demand from large cloud providers for Cisco's networking hardware is running well ahead of what anyone expected at the start of the year.
Cisco's CFO added that it was reasonable to expect at least $6 billion in AI hyperscale revenue in fiscal 2027. The company is investing in silicon, optics, security, and AI infrastructure to chase this opportunity, and its recent collaboration with Nvidia on enterprise AI products is part of that push.
The Layoffs
At the same time as the earnings report, CEO Chuck Robbins announced that Cisco would cut fewer than 4,000 jobs in Q4, representing less than 5% of its global workforce. The restructuring is expected to cost up to $1 billion in severance and related expenses, with around $450 million hitting in Q4 and the rest landing in fiscal 2027.
Robbins framed it as a shift toward areas where "demand and long-term value creation are strongest," which in plain terms means moving money and people away from slower-growth parts of the business and toward AI infrastructure, software, and security.
Rather than cuts made from weakness, this is a company that is profitable, growing fast, and generating strong cash flows, actively choosing to reshape itself around AI while it has the financial strength to do so.
What This Pattern Means
Cisco isn't alone here. Across the tech industry, the same story keeps playing out, with record profits, strong AI investment guidance, and layoffs all landing in the same press release. The logic is straightforward enough, since AI infrastructure requires capital rather than headcount, and investors reward companies that make that trade decisively.
The uncomfortable reality is that "AI transformation" often means fewer people doing more work with AI tools, while the savings get redirected toward the hardware and software that powers those tools. For workers, that's a hard trade to be on the wrong side of, no matter how strong the company's quarterly numbers look.
The Bottom Line
Cisco's Q3 was genuinely impressive and the AI order momentum is real, but the day it posted a record quarter is also the day it started cutting 4,000 jobs, and the market rewarded both moves simultaneously.
That's not a one-company story, and it's becoming the standard playbook for big tech in the AI era.
AI PROMPT OF THE DAY
Category: Career Strategy
"I work at a company going through an AI-driven restructuring. Help me understand how to position my skills and role as an asset in this transition. My current role is [Job Title], my main responsibilities are [list 3–5 key tasks], and the company is investing heavily in [AI focus area]. Give me a clear, honest assessment of which parts of my work AI is most likely to affect and where I can build value that's harder to automate."
ONE LAST THING
Cisco's record quarter and its 4,000-person layoff weren't separate announcements. They were one announcement, released together, on the same day.
The market saw no contradiction in that and rewarded the stock with a 17% pop. If this feels like a new kind of normal, that's because it probably is. Hit reply, I read every response.
See you in the next one.
— Vivek
P.S. If you know someone in tech trying to make sense of how AI is reshaping jobs and company strategy, send this their way. They can subscribe at https://savvymonk.beehiiv.com/