Record $15.8B revenue and $1.06 EPS beat estimates; Cisco targets $9B in AI orders after $5.3B secured from hyperscalers. Shares jumped ~20% after-hours on restructuring plan.
Cisco Systems dropped a dual headline Wednesday: a record revenue quarter and a restructuring that will eliminate nearly 4,000 jobs. The after-market reaction – a roughly 20% jump in shares – shows traders saw the AI order pipeline repricing, not just the earnings beat.
Cisco posted Q3 FY2026 revenue of $15.8 billion, topping the $15.56 billion analysts expected. Adjusted earnings per share landed at $1.06 versus the consensus call for $1.04. Year-over-year revenue climbed 12% from $14.15 billion in the comparable quarter last year.
| Metric | Reported/Updated | Previous/Expected | Change |
|---|---|---|---|
| Revenue (Q3 FY2026) | $15.8B | $15.56B expected | +$240M |
| Adjusted EPS (Q3) | $1.06 | $1.04 expected | +$0.02 |
| AI Orders Target (FY2026) | $9B | $5B prior | +$4B |
| AI Revenue Target (FY2026) | $4B | $3B prior | +$1B |
The headline beat was moderate. Revenue exceeded the Street by less than 2%, and EPS by two cents. In a market that has punished single-digit beats from legacy hardware names, that would not normally trigger a 20% surge. The real fuel came from the order book.
The layoffs – fewer than 4,000 roles, or less than 5% of the global workforce – are not a defensive cost-cutting exercise. CEO Chuck Robbins framed them as a capital reallocation toward artificial intelligence, security, and next-generation networking. The math is straightforward: redirecting payroll dollars into the businesses where hyperscaler demand is converting fastest.
Since the start of the fiscal year, Cisco has secured $5.3 billion in AI infrastructure orders from large cloud providers. That number alone exceeds the prior full-year AI order target, and it was accumulated in less than a quarter. The conversion of hyperscaler relationships into hard contracts is the mechanism that repriced the stock after hours.
Management raised the full-year AI order target to $9 billion, up sharply from the previous $5 billion estimate. The AI revenue target moved to $4 billion from $3 billion. This signals that products are not just being ordered; they are shipping and being recognized as revenue. The trajectory implies the AI business could approach a $16 billion annualized run-rate in future years if the hyperscaler cycle holds.
Cisco estimates pre-tax charges of up to $1 billion for severance and related costs. It expects about $450 million of that to land in the following quarter, with the remainder spread across fiscal 2027. The company said it will provide extended training resources and job placement assistance, noting that an internal program previously helped roughly 75% of participants find new roles.
The staggered charge profile means Q4 margins will take a visible hit – roughly $450 million in one-time costs – while the balance drags into FY2027. Analysts will need to strip out those items to see the underlying margin expansion from the AI revenue shift. For traders, the restructuring timeline is not a reason to fade the stock; it’s the bridge cost of moving from a legacy networking mix toward higher-multiple AI infrastructure.
CSCO jumped roughly 20% in after-hours trading, an outsized move for a company that still carries an Alpha Score of 68 (Moderate) on the AlphaScala platform. That score sits between META (56) and ADP (41) among recent checks, suggesting the quantitative model already had a constructive read on the shares before the AI guidance upgrade. CSCO stock page
The 20% after-hours jump looks like a repricing of AI expectations, not a one-time beat reaction. Cisco’s pivot from legacy networking to AI infrastructure is showing in hard orders. The restructuring, while painful, accelerates that shift. Traders will watch whether the $9 billion order target proves conservative, and if AI revenue can compound in fiscal 2027.
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