Cisco CEO reveals real reason behind 4,000 job cuts 

Cisco is positioning itself as one of the companies built to win from the artificial intelligence boom. 

But that shift is bringing pain for workers. Despite a record quarter, the tech giant is reducing thousands of jobs as part of a broader restructuring tied to where it sees future growth.

The job cuts come as the company shifts more money and focus toward areas it believes will define the next phase of technology, including AI, security, silicon, and optics.

“These investments are building from a position of strength — and focusing on the technologies and businesses that will accelerate our growth, deliver unmatched innovation to customers and partners, and define our future,” said Cisco CEO Chuck Robbins.

And Cisco is not alone. Across the tech industry, companies are still reporting growth while moving money, workers, and capital into AI and other areas they believe will drive long-term returns. 

Keeping pace with AI infrastructure and advancements is expensive, as evidenced by the increase in capital expenditures reported alongside earnings of big tech companies.

Cisco cuts thousands of jobs

Cisco CEO Chuck Robbins, during the company’s earnings release, said the company is making changes that will reduce its overall workforce in the fourth quarter by fewer than 4,000 jobs, representing less than 5% of its total employee base.

Most notifications will begin on May 14 and continue globally, subject to local laws and regulations, Robbins noted in a Cisco blog post.

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The company said affected employees will receive prorated FY26 bonuses and support in finding new roles, either inside or outside Cisco, through the company’s placement services.

Cisco will also provide impacted workers with one year of access to Cisco U courses and certifications, including courses covering AI, security, and networking. 

Robbins said Cisco is making “hard decisions” about where it invests, how it is organized, and how its cost structure reflects the opportunity in front of the company.

Robbins made a similar point in a CNBC interview with Jim Cramer, saying Cisco must move quickly as the market changes.

“Given the speed at which the market is moving, we need to make a rapid reallocation of resources,” Robbins said. Robbins said he did not want AI to become the “excuse” for the cuts; the truth is that the company needs funding for silicon, optics, and more.

He acknowledged that impacted employees may not understand if he says the move is about “cost reallocation” rather than “cost reduction.” But he also said reallocated funds will create jobs within the company, into which affected employees could potentially move.

“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. I am confident Cisco will be one of those winners,” said Robbins.

Clearly, Cisco is not framing the cuts as a response to weak demand. It is reducing roles to shift more resources toward business tied to the AI buildout.

Cisco’s stock is up 51% year to date.

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Record revenue makes layoffs stand out

The timing of the cuts is notable because Cisco is coming off a strong quarter.

Cisco reported a record Q3 2026 revenue of $15.8 billion, up 12% year over year. The company also reported GAAP net income of $3.4 billion, up 35%, while GAAP earnings per share rose 37% to 85 cents.

The company’s total product orders rose 35% year over year, while networking product orders grew more than 50%.

“Cisco is well-positioned as the critical infrastructure for the AI era, building on our technology leadership and customer trust, while innovating at the speed and scale that our dynamic world demands,” said Robbins in the earnings release.

This made the layoffs stand out more, despite accounting for only 5% of the total workforce. The cuts come as the company raises expectations for its AI infrastructure business.

The earnings showed that the company took $1.9 billion of AI orders in Q3 alone, with product mix balanced between Silicon One-based networking systems and optics. 

AI workloads require significant networking capacity, data movement, and security. Cisco is positioning its networking systems, silicon, optics, and security products as critical infrastructure for companies building and running AI systems.

And this requires additional funding or reallocation of existing funds, which Cisco is doing to position itself for the next phase of the AI boom. However, for the affected employees, there is an immediate cost.

Related: JPMorgan doubles down on stock market message for 2026

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