Cisco shares hit record on strong forecast, AI push with job cuts

Cisco shares surged 17% to a record-high on Thursday, set for their biggest single-day gain in over two decades, after it posted AI demand-powered strong results and announced nearly 4,000 job cuts to redirect investments into technology.

The jump, if sustained, would mark the best day for the stock since a robust earnings ‌reports in ⁠May ⁠2002 sparked a furious rally in the aftermath of the dotcom crash.

The networking gear maker's near-$400 billion market capitalization was set to swell by about $70 billion.


Cisco has emerged as a big winner from Big Tech's AI spending spree, thanks to its key role in supplying gear crucial to the functioning of data centers. The stock had gained 32% this year by Wednesday's ⁠close.

The company ‌raised its annual revenue forecast on Wednesday and said ​its AI-focused ​restructuring, expected to cost $1 billion, will shift investments toward AI ⁠and related growth avenues.

The fourth-quarter retrenchments would represent less than 5% ​of its workforce, Cisco said. It added that ​it was strategically investing in silicon, optics, security as well as employees' use of AI across-company and reducing roles in some areas.

"Cisco feels a lot like Intel here, as the puck has gone to where CEO Chuck Robbins invested - rewarding the company for its custom silicon and optics," said ‌analysts at Melius Research.

The firm has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year and ​raised its full-year ​order expectation to $9 ⁠billion from $5 billion previously.

The San Jose, California-based company supplies high-speed networking equipment, such as switches and routers, that data centers use to run AI.

"We think this networking ​momentum can continue as this space has a clear secular tailwind from AI inference," Melius added.

Last month, Cisco unveiled switches designed to connect different types of quantum computers, advancing its push toward a network of quantum machines, in line with efforts by peers such as Alphabet's Google and IBM.