Key Highlights
- Cisco delivered fiscal Q3 adjusted earnings of $1.06 per share and $15.8 billion in revenue, exceeding analyst projections.
- The networking division generated $8.82 billion in revenue, significantly above the $8.44 billion consensus estimate, fueled by AI infrastructure investments.
- Management increased its full-year AI infrastructure order projection to $9 billion from $5 billion, following $5.3 billion in orders year-to-date.
- The company revealed plans to eliminate approximately 4,000 positions — representing under 5% of total headcount — in a restructuring initiative expected to cost up to $1 billion.
- Fourth-quarter projections exceeded expectations, with revenue guidance of $16.7 billion to $16.9 billion compared to the $15.8 billion Wall Street forecast.
Cisco Systems (CSCO) reported impressive fiscal third-quarter results, exceeding Wall Street projections as robust artificial intelligence infrastructure demand drove performance across key business segments.
The networking equipment giant posted adjusted earnings of $1.06 per share alongside $15.8 billion in quarterly revenue for the period ending April 26. Wall Street consensus had anticipated $1.03 to $1.04 per share with revenue ranging from $15.56 to $15.6 billion. Shares of CSCO stock surged approximately 16% in extended trading after the announcement and climbed as high as 20% during Thursday’s premarket session.
Prior to the earnings release, CSCO had already gained 32% year-to-date and 66% over the trailing twelve months.
Chief Executive Chuck Robbins emphasized the company’s position during the earnings call: “Our technology is more relevant than ever in the AI era. As a result, we saw record high demand in Q3.”
The catalyst behind this performance is clear. Tech giants including Meta Platforms are investing hundreds of billions into AI infrastructure, creating substantial demand for the hardware manufacturers that provide connectivity solutions — with Cisco positioned as a primary beneficiary.
Networking Business Powers Performance
Cisco’s networking division — which represents its largest revenue contributor — generated $8.82 billion, substantially exceeding the $8.44 billion analyst estimate. Product orders in the networking segment jumped over 50% during Q3, while data-center switching orders increased more than 40% compared to the prior year.
The technology leader has accumulated $5.3 billion in AI infrastructure orders during the current fiscal year, prompting management to elevate its full-year target to $9 billion from the previous $5 billion objective.
Fourth-quarter projections demonstrated similar momentum. Cisco guided for earnings between $1.16 and $1.18 per share with revenue of $16.7 billion to $16.9 billion — considerably above the $1.08 EPS and $15.8 billion revenue consensus.
The single area of concern: profitability metrics. Cisco posted Q3 gross margins of 66%, slightly under the 66.2% estimate and down from 68.6% in the year-ago period. Elevated memory costs are pressuring margins throughout the hardware sector, prompting Cisco to implement price increases as a countermeasure.
Workforce Reduction Announced Amid Restructuring
Alongside the positive financial results, Cisco disclosed plans to reduce its global employee base by under 4,000 individuals — representing less than 5% of the workforce — as part of a strategic realignment toward artificial intelligence and high-growth business areas.
Layoff notifications were scheduled to commence May 14, with a phased global rollout adhering to regional employment regulations. The restructuring program carries an estimated cost of up to $1 billion, with approximately $450 million expected to be recognized in Q4 and the remainder in fiscal 2027.
Robbins acknowledged the difficult nature of the decision: “This means making hard decisions.”
These reductions contribute to the ongoing technology sector employment adjustment. Data from Layoffs.fyi indicates 103,571 technology professionals have been laid off in 2026 to date — nearing the 124,201 total for the entire 2025 calendar year.
According to TipRanks, CSCO maintains a consensus Strong Buy rating, supported by seven Buy recommendations and two Hold ratings issued over the past three months. The average analyst price target is set at $99.00.
