Cisco shares surged by double digits as the tech giant revealed a bumper haul of AI orders and disclosed plans to axe nearly 4,000 workers. The stock jumped around 18 percent in after-hours trading today as the company beat Wall Street expectations and said demand for its artificial intelligence infrastructure was running far ahead of forecasts.
The giant rally boosted the net worth of Cisco boss Chuck Robbins by millions of dollars on paper, given that he owns hundreds of thousands of shares in the company. Cisco's strong showing in the quarter helped lift the stock, as did plans to cut around 5 percent of its workforce, with layoffs beginning on May 14.
The company now expects to spend $9 billion on AI projects this year, up from a previous forecast of $5 billion, joining the horde of other so-called 'hyperscalers' pouring cash into the hottest thing in tech. Robbins told investors that the winners in the AI era will need 'focus and urgency,' plus the discipline to shift spending toward the strongest areas of demand.
'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,' said Robbins. The announcement makes Cisco the latest major US corporation to cut jobs while racing to pour money into AI, a trend that has repeatedly been rewarded by Wall Street.
San Francisco tech company Cloudflare recently slashed 1,100 workers after touting a 34 percent jump in first-quarter revenue to $639.8 million, fueled by its aggressive AI push. Twitter founder Jack Dorsey's payments company Block has axed 4,000 roles, while Atlassian has slashed around 10 percent of its workforce to refocus on AI. Amazon has been cutting 30,000 employees in phases over recent months, including 16,000 in January, to reduce corporate bureaucracy, while Meta announced 8,000 layoffs in April, representing roughly 10 percent of its workforce, all for AI. Microsoft offered a voluntary retirement buyout for roughly 7 percent of its US workforce, around 8,750 people, to 'rebalance' the company for the AI era.
Cisco is heavily involved in AI infrastructure, partnering with firms like Nvidia to build specialized, high-performance network security and compute infrastructure.
