Cisco Systems delivered one of its strongest quarters in years on May 13, 2026, reporting record fiscal third-quarter revenue of $15.84 billion and dramatically lifting its outlook for AI infrastructure orders. Shares jumped roughly 17–20% in extended trading as the networking giant said hyperscaler demand for its silicon, optics and switching gear has accelerated faster than it forecast just months ago. Alongside the upbeat numbers, CEO Chuck Robbins announced that Cisco will cut nearly 4,000 jobs — under 5% of its workforce — to redirect spending toward AI.
A blowout AI quarter
Q3 revenue of $15.84 billion rose about 12% year over year and topped the $15.56 billion analysts had expected, while adjusted earnings per share of $1.06 came in ahead of the $1.04 consensus. Net income climbed to $3.37 billion from $2.49 billion a year earlier. Networking, the segment most directly tied to AI build-outs, jumped roughly 25% to $8.82 billion.
The headline figure for investors was AI: Cisco said it booked about $1.9 billion of AI infrastructure orders from hyperscalers in the quarter alone, bringing year-to-date AI orders to roughly $5.3 billion. That total already exceeds the $5 billion full-year target the company set earlier in fiscal 2026.
Forecast lifted to about $9 billion
On the back of those orders, Robbins raised Cisco's FY26 AI infrastructure orders outlook to roughly $9 billion — about 4.5 times the prior fiscal year's level — and lifted overall full-year revenue guidance. For Q4, the company guided to revenue of $16.7–$16.9 billion and adjusted EPS of $1.16–$1.18, both ahead of Wall Street's forecasts. The strength is concentrated in Cisco's Silicon One networking chips, advanced switching, and optical interconnect products that stitch together GPU clusters inside AI data centers.
Restructuring as the strategy shifts
The job cuts, which Cisco said it would begin executing this quarter, are framed as a deliberate reallocation rather than a response to weakness. The company expects roughly $1 billion in pre-tax charges tied to severance and related costs, with about $450 million landing in the fourth quarter and the remainder in fiscal 2027. Robbins has publicly tied the restructuring to a broader argument that AI is creating winners and losers based on speed and discipline in shifting capital toward the highest-demand areas.
Why it matters
Cisco's quarter is one of the cleanest data points yet that AI capex is flowing well beyond Nvidia and the largest cloud chip suppliers and into the wider data-center networking stack. With hyperscalers continuing to expand GPU clusters at gigawatt scale, the equipment that connects those chips — switches, routers and optics — is becoming a strategic chokepoint. The flip side is the labor signal: even a company seeing once-in-a-decade demand growth is willing to lay off thousands to free up budget for AI engineering and silicon. Expect competitors such as Arista, Juniper and Broadcom to face sharper questions about their own AI pipelines after Cisco's print.
