Cisco Stock Surges 20% Amid Plans for 4,000 Layoffs and Artificial Intelligence-Led Restructuring Amid Ongoing Boom in Orders

Cisco Surges 20% After Announcing Restructuring and AI-Driven Growth

Cisco, the largest maker of networking equipment, saw its shares surge 20% in after-market trade on Thursday after the company announced a significant restructuring aimed at shifting funds towards artificial intelligence (AI) related growth areas. The California-based firm also delivered a better-than-expected revenue forecast.

Shares of Cisco rose 19.76% in extended trading to $122, marking a significant increase in the stock's value. This surge is part of a larger trend, with the stock having risen 34% in 2026 so far, driven by high demand for AI-related stocks in the global markets.

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Cisco's projected fourth-quarter revenue of $16.7 billion to $16.9 billion significantly beats Bloomberg analysts' estimates of $15.8 million, underscoring growing orders from hyperscalers and the company's pivot to the AI economy. The company's third-quarter revenue of $15.8 billion, up 12% year-over-year, also supports this trend.

The restructuring, which involves laying off nearly 4,000 employees, is expected to boost the company's position in the market. CEO Chuck Robbins emphasized the importance of focus, urgency, and discipline in investing in areas where demand and long-term value creation are strongest. The company's layoffs will affect fewer than 4,000 jobs, or less than 5% of the total employee base, and will result in as much as $1 billion in severance costs and other one-time expenses.

Cisco is making strategic investments in silicon, optics, security, and the use of AI across the company, which are expected to drive growth and innovation. The company has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year, and has raised its full-year order expectation to $9 billion from $5 billion previously. This suggests that the AI shift might already be paying off.

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On a post-earnings call, Cisco's finance chief, Mark Patterson, said it is "reasonable" to expect at least $6 billion of revenue on the AI hyperscale side in fiscal 2027. Analysts have praised Cisco's AI-related growth, with Vested Finance noting that the company's print is the first real evidence that the second-derivative names – switching, routing, optical interconnect – are starting to put up numbers, not just stories.

However, the stock is already trading at a premium, with a price-to-earnings ratio of over 33 times earnings, which is rich by Cisco's own history. Vested cautioned that while the AI tailwind is real, it may not make every other line of the profit and loss statement look pretty.