Quick Summary
- Cisco’s fiscal third quarter delivered adjusted earnings of $1.06 per share and $15.8 billion in revenue, surpassing analyst projections across the board.
- The networking division generated $8.82 billion in revenue, significantly exceeding Wall Street’s $8.44 billion estimate, fueled by robust AI infrastructure demand.
- Management increased its fiscal year AI infrastructure order projection to $9 billion from $5 billion after accumulating $5.3 billion in orders through Q3.
- The networking giant unveiled plans to eliminate approximately 4,000 positions — representing under 5% of total headcount — through a restructuring initiative projected to cost as much as $1 billion.
- Fourth quarter projections exceeded expectations, with forecasted revenue of $16.7 billion to $16.9 billion compared to the $15.8 billion consensus estimate.
Cisco Systems (CSCO) reported impressive fiscal third-quarter performance, exceeding Wall Street expectations for both top and bottom lines as AI infrastructure hardware demand accelerates.
The networking equipment leader posted adjusted earnings of $1.06 per share alongside $15.8 billion in quarterly revenue for the period concluding April 26. Consensus forecasts had anticipated earnings between $1.03 and $1.04 per share with revenue ranging from $15.56 billion to $15.6 billion. CSCO shares skyrocketed nearly 16% during after-hours sessions following the announcement, extending gains to as high as 20% in Thursday’s premarket activity.
Heading into the quarterly report, CSCO had already posted year-to-date gains of 32% and climbed 66% over the trailing twelve-month period.
Chief Executive Chuck Robbins put it simply during the earnings conference: “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 unmistakable. Tech giants like Meta Platforms are investing hundreds of billions into AI infrastructure, with that capital flowing directly to companies manufacturing the networking hardware that powers these systems — and Cisco stands at the forefront.
Networking Division Powers Growth
Cisco’s networking business — representing its largest revenue stream — generated $8.82 billion, comfortably surpassing the $8.44 billion analyst projection. Product orders within the networking division climbed over 50% during Q3, while data-center switching orders increased more than 40% on a year-over-year basis.
The company has accumulated $5.3 billion in AI infrastructure orders through 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 strength. Cisco anticipates earnings between $1.16 and $1.18 per share with revenue spanning $16.7 billion to $16.9 billion — substantially above analyst expectations of $1.08 per share and $15.8 billion in revenue.
The single pressure point: profitability metrics. Cisco reported third quarter gross margins at 66%, marginally below the 66.2% forecast and down from 68.6% in the year-ago period. Escalating memory component costs are compressing margins industry-wide, prompting Cisco to implement price adjustments as a countermeasure.
Workforce Reduction Accompanies Strong Performance
Alongside the robust financial results, Cisco revealed intentions to reduce its global employee base by under 4,000 workers — representing less than 5% of total staff — through a restructuring program concentrated on artificial intelligence and high-growth business segments.
Termination notifications were scheduled to commence May 14, proceeding globally in accordance with regional employment regulations. The restructuring carries an anticipated price tag of up to $1 billion, with approximately $450 million expected in Q4 and remaining charges recognized throughout fiscal 2027.
Robbins acknowledged the difficult nature of the decision: “This means making hard decisions.”
These reductions contribute to widespread technology sector workforce adjustments. Data from Layoffs.fyi indicates 103,571 technology sector employees have been terminated in 2026 to date — nearing the 124,201 total recorded throughout 2025.
According to TipRanks, CSCO maintains a consensus Strong Buy rating, with seven Buy recommendations and two Hold ratings issued over the past three months. The average analyst price target sits at $99.00.
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