^{Photo: Bloomberg News}

Cisco delivered one of its strongest market performances in years after the networking giant reported better-than-expected quarterly earnings, raised its outlook, and revealed a sharp increase in artificial intelligence infrastructure demand. The company’s stock jumped 17% in extended trading, putting Cisco on track for its biggest single-day rally since the early 2000s.

The earnings report marked a major turning point for a company that had struggled to keep pace with some of the biggest winners of the AI boom, including chipmakers and hyperscale cloud providers. While Cisco was initially viewed as a slower-moving participant in the artificial intelligence race, investors are now increasingly betting that the company’s networking infrastructure will become a critical backbone for the next generation of AI data centers.

At the same time, Cisco announced another major workforce reduction, saying it plans to cut fewer than 4,000 jobs during the current quarter as part of a broader restructuring tied to shifting investments toward AI-focused growth areas.

Cisco Beats Wall Street Expectations

For the quarter ending April 25, Cisco posted stronger-than-expected results across both earnings and revenue.

The company reported adjusted earnings per share of $1.06, beating analyst expectations of $1.04. Revenue came in at $15.84 billion, above the $15.56 billion projected by Wall Street analysts.

Revenue increased approximately 12% compared to the same quarter last year, when Cisco generated $14.15 billion in sales.

Net income also rose sharply, climbing to $3.37 billion, or 85 cents per share, compared with $2.49 billion, or 62 cents per share, a year earlier.

The results signaled that Cisco’s core networking business is regaining momentum after years of slower growth and increasing competitive pressure from cloud-native infrastructure providers.

AI Orders Are Fueling Cisco’s Comeback

The biggest driver behind investor enthusiasm was Cisco’s rapidly growing AI infrastructure business.

The company revealed it has already secured $5.3 billion in AI infrastructure and hyperscaler-related orders so far this fiscal year. Cisco also dramatically increased its full-year AI orders forecast to $9 billion, up from its previous estimate of $5 billion.

Additionally, Cisco raised its expected AI-related revenue target for the fiscal year to $4 billion, compared with its earlier projection of $3 billion.

The surge reflects growing demand from major cloud providers, enterprise customers, and AI developers that need increasingly powerful networking systems to support massive data transfers between GPUs, servers, and AI clusters.

Artificial intelligence workloads require significantly more networking capacity than traditional cloud applications, creating a major opportunity for companies that provide routers, switches, optical systems, and data center infrastructure.

Cisco appears to be positioning itself directly at the center of that trend.

Networking Business Delivers Strong Growth

Cisco’s networking division produced one of the strongest performances of the quarter.

Networking revenue jumped 25% year-over-year to $8.82 billion, comfortably surpassing analyst expectations of approximately $8.47 billion.

The growth was supported by increased enterprise infrastructure spending and accelerating demand for AI-ready networking systems.

During the quarter, Cisco introduced several new networking switches and routers powered by its next-generation processors, aiming to strengthen its position in high-performance AI infrastructure environments.

The company also launched a new AI model security leaderboard designed to rank generative AI systems based on their resistance to cybersecurity attacks, signaling Cisco’s effort to expand deeper into AI security and infrastructure management.

Meanwhile, Cisco’s security division generated roughly $2 billion in revenue, remaining mostly flat compared with the prior year but still slightly exceeding analyst expectations.

Cisco Is Restructuring Around the AI Era

Despite the strong financial performance, Cisco confirmed it is reducing its workforce by nearly 4,000 employees — representing less than 5% of its total staff.

CEO Chuck Robbins said the layoffs reflect the company’s effort to reallocate investments toward areas with stronger long-term AI growth opportunities.

Robbins described the restructuring as part of a broader transformation designed to ensure Cisco remains competitive during the next phase of the artificial intelligence revolution.

He said companies that succeed in the AI era will need to move quickly, focus investments strategically, and continuously adapt organizational structures to evolving demand patterns.

Cisco disclosed that severance expenses and related restructuring costs are expected to total approximately $1 billion before taxes, with about $450 million expected to be recognized during the upcoming fiscal quarter.

The company joins a growing list of technology firms restructuring operations as AI reshapes hiring priorities, spending strategies, and product development across Silicon Valley.

Wall Street Is Reassessing Cisco’s AI Potential

For much of the AI rally, Cisco was largely overshadowed by companies such as NVIDIA, Microsoft, and other hyperscale infrastructure providers.

Many investors initially questioned whether traditional networking companies would meaningfully benefit from the generative AI boom.

That perception is now changing rapidly.

AI systems require enormous volumes of data movement between chips, servers, storage systems, and cloud infrastructure. As AI models become larger and more complex, networking performance becomes increasingly critical to maintaining processing efficiency.

This shift is creating new demand for advanced switches, routers, optical interconnects, and AI-optimized data center architecture — areas where Cisco has decades of expertise.

The company’s stock had already gained roughly 33% this year before the earnings release, significantly outperforming the broader Nasdaq index, which rose approximately 14% during the same period.

Cisco shares also recently surpassed their previous dot-com era highs for the first time, signaling renewed investor confidence after years of slower growth.

The AI Infrastructure Race Is Intensifying

Cisco’s resurgence comes as competition intensifies across the AI infrastructure market.

Major technology companies are pouring hundreds of billions of dollars into expanding AI data centers, GPU clusters, and networking systems to support explosive demand for generative AI applications.

Cloud providers including Amazon Web Services, Google Cloud, and Microsoft Azure continue racing to build massive AI infrastructure ecosystems capable of supporting enterprise AI workloads.

That spending boom is creating opportunities not only for semiconductor companies but also for networking providers like Cisco that enable communication across AI clusters.

Analysts increasingly believe networking could become one of the most critical layers of the AI stack over the next decade, particularly as models scale toward trillions of parameters requiring ultra-fast data movement.

Cisco’s Future Depends on AI Execution

While Cisco’s latest results boosted investor confidence, the company still faces significant execution challenges.

The networking giant must prove it can maintain momentum in AI infrastructure while simultaneously modernizing slower-growing legacy businesses and expanding its software and security capabilities.

The company also faces fierce competition from rivals developing specialized AI networking hardware and next-generation cloud architectures.

Still, the latest earnings report suggests Cisco may finally be finding its footing in the AI economy after years of uncertainty.

By combining its established enterprise relationships, global networking dominance, and expanding AI infrastructure portfolio, Cisco is attempting to reposition itself not as a legacy networking company — but as a foundational player in the future of artificial intelligence infrastructure.