Cisco Systems saw its stock price skyrocket by 17% in late trading on Wednesday. Investors rushed to buy shares after the networking giant released a financial report that blew past everything Wall Street expected. The company showed that it is finally finding its footing in the aggressive race to build artificial intelligence infrastructure. If these gains hold, it will mark the most powerful single-day rally for the company since 2002.
The financial numbers tell a story of strong growth. Cisco reported an adjusted profit of $1.06 per share, beating the $1.04 that analysts predicted. Total revenue for the quarter hit $15.84 billion, which sits well above the $15.56 billion estimate. When you look at the same time last year, revenue jumped by a solid 12%. Net income also climbed significantly, reaching $3.37 billion compared to just $2.49 billion a year ago.
Artificial intelligence is the main engine driving this sudden success. Cisco revealed that it has already taken in $5.3 billion in orders for AI infrastructure and large-scale data center equipment so far this year. Because demand is so high, the company raised its total order forecast for the entire fiscal year to $9 billion. This is a massive leap from its earlier guess of only $5 billion. Cisco now expects to make $4 billion in direct revenue from the AI market this year, up from its previous $3 billion goal.
The outlook for the next few months looks even brighter. For the upcoming fourth quarter, Cisco expects to earn between $1.16 and $1.18 per share. It also projects revenue to land between $16.7 billion and $16.9 billion. These numbers are much higher than the $15.82 billion that market experts originally forecast. This optimistic guidance gave investors the confidence to push the stock to new heights.
However, this growth comes with a human cost. Cisco confirmed that it will cut its workforce by fewer than 4,000 jobs this quarter. This reduction represents about 5% of its total global staff. CEO Chuck Robbins explained in a blog post that these cuts will start on May 14. The company is joining a long list of other tech firms that are shrinking their teams to save money and move more resources toward artificial intelligence.
Robbins stated that the winners in this new era of technology will be the companies that move with urgency and discipline. He believes Cisco must shift its investments toward the areas where people are spending the most money right now. Making these hard choices about staffing and organization is necessary to capture the massive opportunity in front of the company. Cisco expects to spend about $1 billion on severance and other layoff-related costs, with $450 million of that hitting the books this quarter.
The stock market has already been very kind to Cisco lately. Last year, the shares hit a record high, finally moving past the peak they reached during the dot-com bubble over two decades ago. So far in 2026, the stock has gained 33%. This easily beats the Nasdaq index, which has only grown by 14% in the same period. Wall Street seems convinced that Cisco is no longer just an old networking company, but a serious player in the AI hardware space.
Most of the growth happened in the networking division. Revenue in that area surged by 25% to reach $8.82 billion. This was much better than the $8.47 billion that analysts expected to see. Meanwhile, the security division stayed mostly flat, bringing in about $2 billion. Even though security didn’t grow much, it still met the goals that the company set for itself earlier in the year.
Cisco is also rolling out new technology to keep its momentum going. During the last three months, the company launched new switches and routers that use its latest high-power processors. It also created a new leaderboard that ranks different AI models based on how well they can survive cybersecurity attacks. By combining its history in networking with new AI tools, Cisco is proving that it can compete with the younger, faster companies in Silicon Valley.
