Cisco cuts nearly 4,000 jobs to spend more on AI, reports record quarterly revenue

At a glance:

• Cisco announces cut of nearly 4,000 jobs, about 5% of its workforce.
• Company reports record quarterly revenue and double‑digit growth in fiscal Q3 2026.
• Cuts are framed as a move to reshape cost structure and boost AI and cybersecurity spending.

What Cisco announced

Cisco disclosed that it will eliminate almost 4,000 positions, representing roughly 5 % of its global headcount. The announcement came in a blog post from chief executive Chuck Robbins, who highlighted the need to “change our cost structure” while accelerating investments in artificial intelligence and security solutions. The layoffs are the latest in a series of workforce reductions the networking giant has undertaken in recent years, following larger cuts in 2024 and a smaller tranche of 150 jobs in 2025.

The company did not provide a detailed breakdown of which business units or geographic regions will be most affected. A Cisco spokesperson declined to comment on the specific timeline for the reductions or on whether the executive compensation of Robbins, slated to exceed $52 million for 2025, will be adjusted in light of the cuts.

Financial performance and AI focus

Despite the downsizing, Cisco reported “record revenue” for its fiscal third quarter, which ended in March 2026. The results beat analysts’ expectations, delivering double‑digit year‑over‑year growth across its core networking, collaboration, and infrastructure segments. Robbins used the earnings call to argue that the company’s strong top‑line performance gives it the flexibility to invest heavily in AI‑driven products and services.

Robbins said the firm is “making strategic investments in our employees’ use of AI across the company,” signaling a shift toward generative‑AI tools for network management, predictive maintenance, and automated security analytics. The company has already begun integrating AI into its Cisco DNA Center and SecureX platforms, and the new budget will accelerate those efforts.

Security challenges driving the shift

Cisco’s heightened focus on cybersecurity comes after a string of high‑profile vulnerabilities in its routers and firewalls were exploited by threat actors. Those flaws have exposed corporate customers—and even U.S. government networks—to intrusion attempts. In addition, Cisco suffered a data breach last year that compromised personal information of some of its customers, further underscoring the urgency of bolstering its security portfolio.

By reallocating resources toward AI‑enhanced security, Cisco hopes to detect anomalies faster and automate response actions. The company’s recent acquisitions in the security space, such as the purchase of Splunk’s security‑operations business, are part of a broader strategy to stay ahead of evolving threats.

Context of recent tech layoffs

Cisco’s move mirrors a broader industry trend where firms cite AI spending as a justification for workforce reductions. Cloudflare, a content‑delivery and security provider, announced layoffs earlier this month despite posting solid earnings. Likewise, General Motors trimmed its staff in a separate announcement, pointing to the need to fund AI research for autonomous‑vehicle development.

These cuts illustrate a paradox in the tech sector: companies are reporting strong financial results while simultaneously shrinking headcount to free up capital for next‑generation technologies. Analysts note that such restructuring can improve operating margins in the short term but may also risk morale and talent retention if not managed carefully.

Outlook and executive compensation

Looking ahead, Cisco plans to channel the savings from the workforce reduction into its AI and cybersecurity roadmaps, aiming to deliver more automated, cloud‑native solutions to enterprise customers. The company’s guidance for fiscal Q4 suggests continued revenue growth, though it cautions that macroeconomic headwinds could affect capital‑expenditure cycles.

Robbins’ compensation package, disclosed in public filings, totals more than $52 million for 2025, reflecting a mix of salary, stock awards, and performance bonuses tied to revenue and profitability targets. While the spokesperson did not comment on any potential adjustments to his pay, the disclosure reinforces the board’s confidence in the strategic direction despite the layoffs.

Overall, Cisco’s dual narrative of record earnings and significant job cuts underscores a strategic pivot: leaner operations paired with aggressive investment in AI and security to maintain its market leadership in networking infrastructure.