Cisco’s Las Vegas Conference Looms as Next Catalyst After Record Quarter and 4,000 Job Cuts

The networking giant heads into its annual user conference from May 31 to June 4 with a packed agenda — and no shortage of narrative threads to weave together. After a quarter that saw record revenue, a dramatic ramp in AI infrastructure orders, and the announcement of roughly 4,000 layoffs, Cisco’s leadership will face investors in Las Vegas with a platform to detail the next phase of its strategic overhaul.

The stage is set by the numbers from the third fiscal quarter. Cisco posted revenue of $15.84 billion, a 12 percent jump from a year earlier, fueled by a surge in orders from hyperscale cloud providers. Product revenue climbed 17 percent to $12.1 billion, while the services side slipped 1 percent to $3.7 billion. On an adjusted basis, earnings per share came in at $1.06, clearing analyst estimates. GAAP net income reached $3.4 billion, or $0.85 per share.

The real headline was the explosion in AI-related demand. Cisco raised its target for AI infrastructure orders in fiscal 2026 to $9 billion, nearly doubling the previous $5 billion goal. The company has already booked $5.3 billion in such orders this fiscal year. Broadly, product orders jumped 35 percent, with network equipment orders rising more than 50 percent and data center switching up over 40 percent. Management attributes the boom to a “networking supercycle” driven by the need for high-speed switches, optical links, and security architecture in AI data centers.

Should investors sell immediately? Or is it worth buying Cisco?

Yet this demand-driven renaissance comes with an uncomfortable twist. Cisco is simultaneously cutting around 5 percent of its workforce — roughly 4,000 jobs — in a restructuring that could cost up to $1 billion before taxes. The company expects to book $450 million of those charges in the current quarter alone. Executives frame the move not as a cost-cutting exercise but as a reallocation of capital and talent toward higher-growth areas like its own Silicon One chips and optical networking. Still, the contrast between record revenue and layoffs gives investors pause.

That tension shows up in the stock’s technical picture. Cisco’s shares have been on a tear: up about 38 percent over the past 30 days and roughly 55 percent year to date. The stock closed Monday at €100.74, just shy of its 52-week high of €101.64, though it slipped 0.89 percent on the day. The Relative Strength Index stands at 76, deep into overbought territory — a level that historically precedes consolidation. At a forward price-to-earnings ratio of 36, the stock trades above the sector average of 31.

Some caution flags appear on the cash flow side. Operating cash flow dipped to $3.75 billion in the third quarter, even as capital expenditures rose. That may temper some of the euphoria, but Wall Street remains broadly bullish. Analysts have rushed to lift price targets: Evercore raised its to $150, while Morgan Stanley set a new target of $120. The consensus view is that Cisco’s pivot to AI infrastructure — and the massive order book that comes with it — justifies the premium.

For the current quarter, Cisco guided for revenue in a range of $16.7 billion to $16.9 billion and adjusted EPS between $1.16 and $1.18. Full-year revenue is expected to land between $62.8 billion and $63.0 billion. By fiscal 2027, the company forecasts at least $6 billion in AI revenue from hyperscalers alone. The Las Vegas conference will test whether management can articulate a clear path from today’s restructuring to tomorrow’s growth — and whether the supercycle is real enough to keep the stock’s hot streak alive.

Ad

Cisco Stock: New Analysis - 18 May

Fresh Cisco information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Cisco analysis...

en | US17275R1023 | CISCO’S | boerse | 69366761 |