Breaking: Cisco Systems Inc. shares skyrocketed 20% in after-hours trading Wednesday after the networking giant delivered better-than-expected fiscal third-quarter earnings and revenue, fueled by surging demand for artificial intelligence infrastructure.
The company also revealed it will eliminate fewer than 4,000 positions—representing less than 5% of its global workforce—as part of a routine restructuring. The combination of a solid financial performance and a relatively modest headcount reduction sent investors scrambling for shares.
Cisco reported earnings per share (EPS) of $0.87 on revenue of $12.80 billion, both exceeding analyst estimates of $0.85 and $12.66 billion. The company attributed the outperformance to robust sales of its networking equipment used in data centers powering AI workloads.
Quote from Cisco CEO
“Our results reflect the accelerating demand for Cisco’s technology as enterprises and cloud providers invest heavily in AI capabilities,” said Chuck Robbins, chairman and CEO of Cisco, in a prepared statement. “We are executing on our strategy to capture this growth while maintaining operational discipline.”
Analysts at Morgan Stanley called the quarter “a clear positive,” noting that Cisco’s core routing and switching business is seeing a tailwind from AI. “AI is not just a hype; it’s translating into real orders for Cisco,” a Citi analyst added.
Background
Cisco has been a bellwether for the broader tech industry, particularly in networking. Over the past year, the company has faced headwinds from supply chain constraints and a cautious spending environment. However, the rise of generative AI and large language models has created new demand for high‑bandwidth, low‑latency network infrastructure.
The job cuts, while not insignificant, are smaller than previous rounds. In 2022, Cisco eliminated about 5% of its workforce. The company emphasizes that the latest reduction is part of “regular business optimization” and not a sign of broader distress.
What This Means
The 20% stock jump signals that Wall Street is betting heavily on AI as the next growth engine for established tech companies like Cisco. The earnings beat and modest layoffs suggest the company is balancing cost controls with investment in high‑growth areas.
“This is a clear signal that AI infrastructure spending is real and accelerating,” said a technology analyst at Goldman Sachs. “Cisco is well‑positioned to capture it.”
For the broader market, Cisco’s results provide a positive data point ahead of other networking companies’ reports. It also reinforces the narrative that AI demand is creating opportunities beyond just chipmakers and cloud hyperscalers.
This story was updated at 8:30 PM ET. Check back for further details.