Cisco Stock Forecast: Surge to New ATH as $9B AI Orders Offset Strategic Job Cuts

Cisco Systems (CSCO) stock surged more than 17% to a new all-time high around $119 in early trading, extending gains after a strong earnings report that highlighted explosive growth in artificial intelligence demand. The move marks one of the company’s biggest rallies in years and signals renewed investor confidence in its AI-driven strategy.

So, what’s driving this sharp move higher? The answer lies in a combination of strong financial performance and a rapidly expanding AI pipeline.

Earnings Beat Fuels Momentum

Cisco reported third-quarter revenue of $15.84 billion, beating expectations and reflecting 12% year-over-year growth. Earnings per share also topped estimates at $1.06, reinforcing the strength of its core business.

Growth came largely from networking, which jumped 25% year over year. Both cloud and enterprise segments contributed to the surge, showing that demand remains broad-based rather than concentrated in one area.

At the same time, product orders excluding AI accelerated to 19% growth, up from 10% in the previous quarter. That shift suggests improving enterprise spending trends, even as macroeconomic uncertainty lingers.

Management also issued strong forward guidance. Fourth-quarter revenue is expected to grow about 14.5%, nearly double Wall Street expectations. That outlook alone helped fuel bullish sentiment across the stock.

AI Orders Tell the Real Story

Still, the biggest catalyst came from Cisco’s AI business. The company revealed it has already booked $5.3 billion in AI-related orders this fiscal year. It also raised its full-year AI order forecast to $9 billion, an 80% increase from prior guidance.

Why does this matter so much? Because it positions Cisco as a key infrastructure player in the AI ecosystem, not just a legacy networking firm.

Hyperscale customers are ramping up demand for AI networking equipment, and Cisco appears to be capturing a meaningful share of that spend. The company also lifted its AI revenue projection to $4 billion for fiscal 2026, with expectations of reaching $6 billion in fiscal 2027.

This rapid expansion signals that AI demand is not just hype. It is translating into real contracts, real deployments, and real revenue growth.

Job Cuts Reflect Strategic Shift

However, the rally comes alongside a major restructuring move. Cisco announced plans to cut fewer than 4,000 jobs, representing under 5% of its workforce.

Why cut jobs during such strong growth? The company says it aims to reallocate resources toward higher-growth areas like AI and cloud infrastructure.

The restructuring will cost about $1 billion, with a significant portion recognized in the current quarter. Management framed the decision as necessary to maintain competitiveness in a rapidly evolving tech landscape.

This raises an important question: can companies scale AI investments without reducing headcount elsewhere? In Cisco’s case, the answer appears clear. The company is prioritizing efficiency and long-term positioning over maintaining its existing workforce structure.

What Comes Next for Cisco Stock?

Cisco’s recent surge reflects more than just a solid earnings beat. It signals a broader transformation into an AI infrastructure leader.

Yet risks remain. The company must execute on its ambitious AI roadmap while managing cost pressures and restructuring challenges.

For now, investors appear focused on one thing: Cisco has found its place in the AI boom. The question is no longer whether it can compete, but how far this momentum can carry the stock.