Cisco Cuts Staff to Boost AI Investment as Stock Surges on Strong Earnings

Cisco Systems announced plans to cut approximately 4,000 jobs, representing less than 5% of its workforce, to reallocate resources toward strategic growth areas including artificial intelligence, silicon, optics, and security. The restructuring is expected to incur one-time charges of about $1 billion. This move coincides with strong financial performance, as Cisco reported fiscal third-quarter revenue of $15.84 billion and adjusted earnings of $1.06 per share, both exceeding analyst estimates. The company also provided optimistic guidance for the fourth quarter. Investors reacted positively to the news, driving Cisco’s stock up 15% in recent trading and pushing its year-to-date gains above 50%. Major financial institutions, including JPMorgan, Morgan Stanley, and UBS, raised their price targets for Cisco shares, citing the company's robust supply chain control and successful pivot to AI-driven data center demands. This development mirrors a broader trend in the tech sector, where companies like Cloudflare and Block are also reducing headcount to fund AI initiatives and improve operational efficiency.