On Wednesday, May 13, 2026, Cisco announced layoffs of close to 4,000 positions — roughly 5% of its workforce — alongside its fiscal third-quarter results. The same day, CEO Chuck Robbins used a blog post to highlight “record revenue” and “double-digit growth,” framing the cuts as a way to reshape the company’s cost structure and channel funds toward AI and cybersecurity.
The context is what makes this unusual: both profit and revenue beat expectations that quarter. This is not a distressed company shrinking to survive. It is a profitable one cutting headcount on purpose, and TechCrunch’s Zack Whittaker put the two facts side by side in a single headline — “record quarterly revenue,” and nearly 4,000 jobs gone.
Cutting 4,000 Jobs in a Record Quarter
Start with the numbers. Close to 4,000 positions, about 5% of employees, with no specific departments named. The official language is a reshaped “cost structure.” On the financial side, the news is unambiguously good: fiscal Q3 revenue and profit both beat expectations, and Robbins called it a record quarter.
Nor is this Cisco’s first swing of the knife. The company ran two separate layoff rounds in 2024 that affected thousands of workers, followed by more than 150 job cuts in 2025. The 2026 round is the third structural adjustment in three years — except this time the stated reason is explicitly AI.
Where the Money Goes: AI and Cybersecurity
Robbins’ statement points the new investment in two directions: AI and cybersecurity. On the AI side, the official wording is investment “in our employees’ use of AI across the company” — meaning AI adoption in internal workflows, not just an outward-facing product roadmap.
The cybersecurity side has concrete debts to pay down. TechCrunch’s reporting lays out the recent record: multiple vulnerabilities in Cisco’s routers and firewalls have been exploited by hackers since 2023, including intrusions that affected corporate customers and U.S. government networks, and a 2025 breach exposed customer personal information via a voice phishing attack. Redirecting saved payroll into security is, for a networking vendor, both a commercial bet and remediation.
The Same Playbook at Cloudflare and GM
Zoom out and Cisco is not alone. In the days before the announcement, both Cloudflare and General Motors made similar AI-related job cuts, and both were also in strong financial shape. That is the counterintuitive pattern of 2026’s big tech restructuring: companies cutting not because they are short of money, but because they are deliberately moving budget from payroll into AI spending. It is the same spending wave we traced in our 2026 opening outlook (see /blog/ai-2026-opening-outlook/).
The contrast group is clear: cloud and network infrastructure companies across 2026 face pressure where AI capital expenditure squeezes the existing cost structure, and layoffs are the fastest lever for reallocating that budget.
CEO Pay and the Backlash Risk
The cuts also touch a nerve. Per SEC filings, Robbins was on track to receive more than $52 million in executive pay for 2025. When TechCrunch asked whether he would reduce his own compensation, a Cisco spokesperson declined to go beyond Robbins’ statement. A company posting record revenue while cutting jobs and paying its CEO that much is the narrative most likely to be scrutinized — which is why follow-up coverage at outlets like Fast Company leaned hard into the tension between layoffs and the AI bet.
What It Means for Enterprises and Developers
Three practical effects. First, enterprise IT buyers should expect networking vendors’ roadmaps to keep tilting toward security and AI infrastructure, and procurement and renewal terms will move with them. Second, take the phrase “invest in our employees’ use of AI” seriously: when a company of Cisco’s scale names internal AI adoption as the priority expenditure funded by layoffs, budgets and demand for internal enterprise AI tooling are becoming real — good news for teams building enterprise AI products. Third, for engineers and operators, “AI-related layoffs” no longer signals a company in decline; judge health from the financials, not from the layoff headline.
Sources
- Cisco cuts nearly 4,000 jobs to spend more on AI, reports ‘record quarterly revenue’ — TechCrunch
- Cisco layoffs today: Tech giant slashes thousands of jobs as CEO touts record revenue and urgent focus on AI — Fast Company
- Cisco layoffs: Tech giant cuts 4,000 jobs to fund growing AI ambitions — Firstpost
AI-assisted summary compiled from the sources above, reviewed by a human before publishing.