Key Highlights
- Cisco delivered fiscal Q3 adjusted earnings of $1.06 per share alongside $15.8 billion in revenue, surpassing analyst projections.
- The networking division generated $8.82 billion in revenue, significantly outperforming the $8.44 billion Wall Street consensus, fueled by AI infrastructure growth.
- Management increased its fiscal year AI infrastructure order projection to $9 billion from $5 billion after accumulating $5.3 billion in orders year-to-date.
- The technology giant plans to eliminate approximately 4,000 positions — representing under 5% of total staff — through a restructuring initiative projected to cost as much as $1 billion.
- Fourth-quarter projections exceeded expectations, with revenue guidance ranging from $16.7 billion to $16.9 billion compared to the $15.8 billion analyst consensus.
Cisco Systems (CSCO) reported robust fiscal third-quarter performance, exceeding Wall Street expectations driven by accelerating demand for AI infrastructure solutions.
The networking equipment manufacturer posted adjusted earnings of $1.06 per share with revenue totaling $15.8 billion for the period ending April 26. Market analysts had anticipated earnings between $1.03 and $1.04 per share with revenue ranging from $15.56 billion to $15.6 billion. CSCO shares surged nearly 16% during after-hours trading and climbed as high as 20% in Thursday’s premarket session.
Prior to the earnings announcement, CSCO had already gained 32% year-to-date and posted a 66% increase over the trailing twelve months.
CEO Chuck Robbins highlighted the results on the earnings call, stating: “Our technology is more relevant than ever in the AI era. As a result, we saw record high demand in Q3.”
The catalyst is clear. Major cloud providers such as Meta Platforms continue investing hundreds of billions into AI infrastructure, with that capital flowing directly to hardware manufacturers that provide connectivity solutions — positioning Cisco as a primary beneficiary.
Networking Division Delivers Impressive Growth
Cisco’s networking operations — representing its largest revenue generator — produced $8.82 billion, substantially exceeding the $8.44 billion analyst estimate. Networking product orders jumped over 50% during Q3, while data-center switching orders climbed more than 40% compared to the prior year.
The company has accumulated $5.3 billion in AI infrastructure orders through the current fiscal year and elevated its full-year projection to $9 billion from the previous $5 billion target.
Fourth-quarter guidance demonstrated similar strength. Cisco projected earnings ranging from $1.16 to $1.18 per share with revenue between $16.7 billion and $16.9 billion — considerably above the $1.08 EPS and $15.8 billion revenue anticipated by analysts.
The single weakness: profit margins. Cisco reported Q3 gross margins of 66%, slightly below the 66.2% estimate and down from 68.6% in the year-ago period. Escalating memory costs continue pressuring margins throughout the hardware sector, prompting Cisco to implement price increases as a countermeasure.
Cisco Unveils Restructuring Plan With Workforce Reduction
Accompanying the impressive financial results, Cisco revealed plans to decrease its global headcount by approximately 4,000 employees — under 5% of its workforce — through a restructuring effort concentrated on AI initiatives and high-growth segments.
Termination notifications were scheduled to commence May 14, with a phased global rollout complying with regional employment regulations. The restructuring effort carries an estimated cost of up to $1 billion, with approximately $450 million expected in Q4 and remaining expenses recognized during fiscal 2027.
Robbins acknowledged the difficult choice directly: “This means making hard decisions.”
The workforce reduction contributes to an ongoing trend of technology sector downsizing. According to Layoffs.fyi, 103,571 technology workers have been terminated in 2026 thus far — nearing the 124,201 total recorded throughout 2025.
On TipRanks, CSCO maintains a consensus Strong Buy rating, featuring seven Buy recommendations and two Hold ratings issued within the past three months. The average price target sits at $99.00.
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