Cisco Systems' shares surged nearly 19% in premarket trading on Thursday following the company's announcement of approximately 4,000 job cuts and an increased revenue forecast driven by strong demand for AI infrastructure. According to multiple reports, this surge could propel Cisco's stock to a record high, potentially adding about $75 billion to its market value.
Key Takeaways
Cisco Systems' shares surged nearly 19% after announcing plans to cut approximately 4,000 jobs and raise its revenue forecast due to strong demand for AI infrastructure. The company expects $9 billion in AI-related orders this fiscal year.
- Cisco's stock jumped by around 19%, potentially reaching a record high
- The company announced job cuts of nearly 4,000 employees, less than 5% of its workforce
- Cisco raised its full-year revenue forecast to $9 billion for AI infrastructure orders
- CEO Chuck Robbins emphasized focus and urgency in investing in AI and related technologies
The networking gear maker outlined plans to cut less than 5% of its workforce as part of a restructuring aimed at shifting investments toward AI and related growth avenues. The job cuts are planned for the fourth quarter and are expected to cost around $1 billion, according to Reuters. Cisco's shares have gained about 32% this year.
The company 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, up from $5 billion previously, as reported by Reuters and CNBC. Cisco supplies high-speed networking equipment used by data centers to run AI.
CEO Chuck Robbins emphasized the need for focus and urgency in investing in AI and related technologies. 'The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest,' Robbins said according to CNBC.
Cisco's strong showing in the quarter helped lift the stock, as did plans to cut around 5% of its workforce. The announcement makes Cisco the latest major US corporation to cut jobs while racing to pour money into AI—a trend that has repeatedly been rewarded by Wall Street, per DailyMail.com.
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