Cisco Splices Together Record AI Orders and a Historic Stock Rally — With 4,000 Job Cuts as the Cost
Published on 05/17/2026 at 17:07 | Redaktion boerse-global.de
Cisco Systems just delivered a quarter that startled even its most bullish supporters — and then promptly announced it would shed nearly 4,000 employees. The juxtaposition captures a company in the middle of a dramatic transformation: cashing in on the AI infrastructure boom while simultaneously downsizing its legacy workforce.
Shares soared 24.06% in a single week, the strongest weekly performance in almost 25 years, closing Friday at €101.64 — a new yearly high. Since January, the stock has climbed 56.61%, and over the past twelve months it has surged 76.77%. The catalyst was a fiscal third-quarter report that smashed expectations and laid out ambitions Cisco executives would not have dared mention two years ago.
Revenue for the quarter hit $15.84 billion, up 12% year-over-year and above the $15.56 billion analysts had penciled in. GAAP net income came in at $3.37 billion, while adjusted earnings per share of $1.06 edged past the consensus estimate of $1.04. But the headline numbers tell only part of the story. Product orders jumped 35% from a year ago, and the networking segment, Cisco’s traditional core, posted an even steeper gain of more than 50%. Chief Executive Chuck Robbins pointed to a clear surge in bookings from cloud providers and data center operators upgrading their networks for artificial intelligence workloads.
The AI pipeline is expanding faster than the company had forecast. Cisco raised its target for AI infrastructure orders to $9 billion, up from the prior $5 billion mark. Management also offered a concrete outlook for fiscal 2027: at least $6 billion in revenue from AI hyperscalers alone. That forward-looking promise caught Wall Street’s attention. According to Morgan Stanley, all five of the largest hyperscale cloud operators boosted their AI-related orders by triple-digit percentages in the quarter, and Cisco secured five new design wins from those clients. The company’s total order backlog swelled to more than $43 billion, providing unusual revenue visibility for a networking firm long viewed as a slow-growth play.
Should investors sell immediately? Or is it worth buying Cisco?
Analyst reactions were swift and aggressive. HSBC raised its rating from Hold to Buy and more than doubled its price target to $137 from $77, citing the potential start of a “network super-cycle” driven by massive cloud capital expenditure. Rosenblatt Securities went further, setting a target of $150, arguing that Cisco’s role in the AI ecosystem is now structurally embedded.
The stock now trades at a price-to-earnings multiple of 37, a level that suggests the market has priced in a great deal of optimism. The shares are also roughly 55% above their 200-day moving average — a technical signal that can sometimes precede a pullback. Insider selling has already picked up: several board members and executives sold significant stakes earlier this spring.
Cisco’s pivot is not coming cheap. The company plans to cut nearly 4,000 positions, representing less than 5% of its global workforce. Restructuring charges could reach $1 billion, with roughly $450 million expected to hit in the current quarter and the remainder spread through fiscal 2027. Chief Financial Officer Mark Patterson framed the cuts as a rapid reallocation of resources rather than a cost-cutting exercise. The savings will be reinvested into areas Cisco identifies as growth engines for the coming years: AI-integrated security, custom chips, and optical technologies for data centers.
Cisco at a turning point? This analysis reveals what investors need to know now.
For the final quarter of fiscal 2026, Cisco guided for revenue between $16.7 billion and $16.9 billion, with adjusted EPS in the range of $1.16 to $1.18. Full-year revenue is now expected to reach roughly $63 billion, up from an earlier, lower range. The quarterly dividend was maintained at $0.42 per share, payable on July 22, 2026.
The challenge ahead is straightforward: convert the swelling order book into reliably growing top-line revenue. If Cisco can keep quarterly AI orders above the $3 billion threshold in the fourth quarter, the stock’s upward momentum may continue. If hyperscaler spending softens, however, a valuation correction could happen just as quickly as the rally. For now, investors are betting that Cisco’s long road from legacy networking stalwart to AI infrastructure contender is accelerating — layoffs and all.
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