Cisco $CSCO surges 15%+ to record on Q3 revenue beat of $15.8B; 4,000 jobs cut for AI

Q3 FY2026 Earnings Snapshot

Cisco Systems ($CSCO) reported third-quarter fiscal 2026 results after the May 13 close, posting revenue of $15.841 billion — a 12% year-over-year increase — and GAAP diluted EPS of $0.85, up 37% from the same period a year earlier. Both figures exceeded analyst forecasts, sending the stock surging more than 15% in pre-market and early trading on May 14 to within reach of an all-time high.

AI Restructuring: ~4,000 Jobs Cut

Alongside the earnings release, Cisco announced plans to eliminate approximately 4,000 positions — roughly 5% of its global workforce — redirecting cost savings toward AI infrastructure and product development. CEO Chuck Robbins described the move as an acceleration of the company's AI pivot: "We are seeing strong and growing demand for AI-driven networking and security," he said on the earnings call.

Revenue and Operating Momentum

Product revenue grew driven by an uptick in AI-related data-center infrastructure orders, as enterprises upgraded network connectivity to support large language model deployments. Service revenue also expanded, reflecting progress on the multi-year subscription transition that began under the Splunk acquisition integration in prior periods. Operating income reached $3.960 billion for the quarter.

Guidance and Outlook

Management provided stronger-than-expected revenue guidance for Q4 FY2026 (ending July 2026), pointing to a sustained pipeline of AI-related infrastructure deals. The raised outlook reinforced investor confidence, compounding the earnings beat in driving the pre-market share-price reaction.

What to Watch

Shareholders will next focus on Q4 guidance fulfillment and the pace of headcount reallocation into AI product teams. Cisco's ability to grow revenue and EPS at double-digit rates — in a macro environment still absorbing April 2026 trade-policy shifts — signals enterprise IT spending remains resilient. The next scheduled earnings date is late August 2026.

Not investment advice. Verify all figures with primary sources before acting.