Cisco Stock Surges as AI Order Growth Meets Major Job Cuts

Cisco shares surged more than 15% in premarket trading Thursday as the networking giant signaled a major pivot toward artificial intelligence. The company reported a significant uptick in AI-related infrastructure orders, suggesting that the massive spending wave by tech giants is finally trickling down to the hardware and networking sectors that provide the backbone for large-scale language models.

While the AI demand provided a bullish catalyst for investors, the company is simultaneously undergoing a painful internal transformation. Cisco confirmed it will cut roughly 7% of its global workforce as it shifts resources away from legacy hardware lines and toward high-growth areas like cybersecurity and cloud integration. This marks the second major round of layoffs for the firm this year, following a workforce reduction in February.

The move matters because Cisco is often viewed as a bellwether for enterprise technology spending. After several quarters of sluggish growth and inventory gluts, the sudden spike in AI orders suggests that corporate clients are ready to invest again, provided the technology supports next-generation automation. Investors reacted positively to the combination of cost discipline and a clear path into the AI ecosystem.

Moving forward, analysts will be watching to see if this surge in AI demand is sustainable or if it represents a one-time upgrade cycle for major data centers. The company faces the challenge of protecting its market share against nimble rivals while executing a complex workforce transition. Investors will also monitor how the integration of recent acquisitions, such as Splunk, contributes to Cisco's evolving recurring-revenue model.

This story was reported by Yahoo Finance.