Even with record quarterly revenue, Cisco is axing jobs again.
The company said it will eliminate “fewer than 4,000 roles,” representing less than 5% of its workforce, as it reorganizes around AI. That comes as revenue climbed to $15.8 billion, up 12% year over year and ahead of expectations
The timing may feel counterintuitive, but it is becoming increasingly common. Tech companies are reshaping teams to meet AI demand while still posting solid financial results.
Restructuring shifts investment toward AI
In a memo to employees, CEO Chuck Robbins attempted to articulate the thinking behind the decision.
“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.
“I’m confident Cisco will be one of those winners. This means making hard decisions—about where we invest, how we’re organized, and how our cost structure reflects the opportunity in front of us.”
The cuts, according to the company, are part of that realignment. Cisco said it plans to continue hiring in strategic areas, particularly around AI, security, silicon, and optics, while eliminating roles in other parts of the business.
CFO Mark Patterson reinforced that point on an investor call, noting the restructuring was “really not a savings-driven restructure,” but instead focused on shifting resources to where the company sees future demand.
AI demand drives Cisco’s product growth
Demand is already showing up. Product revenue rose 17%, driven in part by what Robbins described as “robust demand for our AI infrastructure and campus networking solutions.”
The company is also increasing investment in cybersecurity, an area that remains critical as it continues to address vulnerabilities in its networking products and the fallout from past security incidents.
Cisco says the restructuring could cost up to $1 billion, mostly from severance, with some of it hitting this quarter and the rest carrying into fiscal 2027.
More broadly, the growth is still there. It’s just showing up in AI infrastructure and security. That tends to carry through to the rest of the ecosystem, too.
Cisco has already been leaning hard into AI infrastructure alongside NVIDIA, including expanded work around secure AI factories, networking, and observability. A lot of that buildout depends on the same areas Cisco is now prioritizing internally: silicon, optics, security, and the plumbing underneath AI workloads.