Cisco surges 15% most since 2011 on AI pivot and job cuts

Cisco Systems Inc. shares jumped 15% on Thursday, the most in more than 14 years, after the networking giant delivered a better-than-anticipated sales forecast and announced plans to cut thousands of jobs as it pivots toward artificial intelligence.

"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," Chief Executive Officer Chuck Robbins said in a memo to employees. "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."

Cisco said it would cut fewer than 4,000 jobs, representing less than 5% of its workforce, with layoff notifications beginning Thursday. The restructuring is part of a broader effort to redirect resources toward AI infrastructure, a market where Cisco competes with Arista Networks Inc. and Juniper Networks Inc. The company's Q3 sales forecast exceeded Wall Street estimates, though specific figures were not immediately detailed in the announcement.

The stock surge — the largest since 2011 — added roughly $30 billion to Cisco's market capitalization, signaling that investors are rewarding legacy tech companies that aggressively restructure for AI. The San Jose, California-based company has been working to reposition its networking portfolio around AI data center demand, a shift that pits it against nimbler rivals in the enterprise networking space. President and Chief Product Officer Jeetu Patel discussed the results on Bloomberg This Weekend, emphasizing the company's AI-focused strategy. The job cuts follow a broader wave of tech layoffs, with LinkedIn separately announcing plans to cut 5% of its staff this week.

The rally suggests the market views Cisco's restructuring as a credible pivot rather than a defensive move. Investors will watch the company's Q4 earnings report for evidence that the cost cuts are translating into margin expansion and that AI-related revenue is accelerating.

This article is for informational purposes only and does not constitute investment advice.