Tech giant Cisco Systems has revealed plans to eliminate 4,000 positions as the networking technology company shifts its strategic focus toward AI infrastructure and related technologies. The layoffs come on the heels of the company announcing record-breaking quarterly sales.
Business Insider reports that Cisco announced Wednesday that it will lay off about 4,000 employees, representing five percent of its total staff, as part of a major restructuring effort aimed at prioritizing AI investments. The announcement came in an internal memo from CEO Chuck Robbins and coincided with the company’s third-quarter fiscal year 2026 earnings report, where it reported record-breaking revenues.
The layoffs are part of a broader organizational shift as Cisco reallocates resources toward areas the company identifies as having the strongest long-term growth potential. According to Robbins, these priority areas include AI chips, fiber optics, and security technologies. The restructuring comes despite the company reporting stronger-than-expected quarterly financial results, with record revenue of $15.8 billion, representing a 12 percent increase year over year.
Cisco revealed that the restructuring is expected to cost up to $1 billion, with the majority of expenses attributed to severance payments. The company anticipates recording approximately $450 million of these charges in the current quarter, with remaining costs extending into fiscal year 2027. Following the announcement, Cisco’s stock price increased more than 17 percent in after-hours trading.
In his memo to employees, Robbins emphasized the challenging operating environment facing the company. “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 wrote. He cited a rapidly changing market, intensifying competition, and a global shortage of components critical to supporting both Cisco’s portfolio and customer AI infrastructure buildout as key factors influencing the decision.
Cisco joins a growing number of technology companies that have implemented workforce reductions while simultaneously citing AI-related efficiencies and organizational changes as driving factors. The trend reflects a broader industry shift as companies reallocate human and financial capital toward artificial intelligence development and deployment. For example, social media giant Snap said it is facing a “crucible moment” as it laid off more than 1,000 workers to embrace AI.
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Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.