Cisco Systems announced plans to cut fewer than 4,000 jobs as part of a strategy to focus on artificial intelligence and other growth areas. The company reported strong third-quarter earnings with revenue of $15.84 billion, beating analyst expectations. This restructuring will cost up to $1 billion in severance and other one-time charges.
Driven by surging demand for AI infrastructure, Cisco raised its full-year revenue forecast to between $62.8 billion and $63 billion for fiscal 2026. The company has received $5.3 billion in AI infrastructure orders so far this year and expects to reach $9 billion by year-end. Cisco plans to invest heavily in silicon, optics, security, and AI technologies to capture this growing market.
Despite Cisco's optimism, some investors remain cautious. UBS warns that AI stocks may be overvalued as growth expectations become unrealistic, noting that major tech companies are shifting to asset-heavy models. Meanwhile, Howard Marks advises staying in the market but warns that investing in pure-play AI companies today is like buying lottery tickets.
Other developments in the sector include Cerebras going public on Nasdaq with its wafer-scale AI chip, which closed 68% above its IPO price. Additionally, a Pizza Hut franchisee sued the company over $100 million in damages caused by AI delivery system failures, highlighting potential risks in AI adoption across industries.
Key Takeaways
['Cisco plans to cut fewer than 4,000 jobs to focus on AI investments.', 'Cisco reported third-quarter revenue of $15.84 billion, exceeding analyst expectations.', 'The restructuring plan will cost up to $1 billion in severance and one-time charges.', 'Cisco raised its full-year revenue forecast to between $62.8 billion and $63 billion for fiscal 2026.', 'Cisco expects AI infrastructure orders to reach $9 billion by year-end.', 'UBS warns that AI stocks may be overvalued as growth expectations become unrealistic.', 'Cerebras debuted on Nasdaq with a wafer-scale AI chip that closed 68% above its IPO price.', 'A Pizza Hut franchisee sued the company over $100 million in damages from AI delivery system failures.', 'Howard Marks compares investing in pure-play AI companies to buying lottery tickets.', "Cisco's stock has risen more than 50% since the start of the year due to AI demand."]Cisco cuts jobs to focus on AI as stock soars
Cisco announced it will cut fewer than 4,000 jobs to focus on artificial intelligence and other growth areas. The company reported strong third-quarter earnings with revenue of $15.84 billion, beating analyst expectations. Cisco expects its stock to rise further as demand for AI infrastructure continues to grow. The restructuring plan will cost up to $1 billion in severance and other one-time charges.
Cisco plans layoffs to boost AI investments after strong earnings
Cisco Systems plans to lay off nearly 4,000 employees as part of a strategy to invest more in artificial intelligence. The company recently reported record revenue of $15.8 billion for the third quarter, exceeding Wall Street predictions. Cisco expects to spend up to $1 billion on severance and related costs for the restructuring. Shares rose about 20% in after-hours trading following the announcement.
Cisco raises revenue forecast as AI orders hit $9 billion
Cisco raised its full-year revenue forecast to between $62.8 billion and $63 billion for fiscal 2026. The company has received $5.3 billion in AI infrastructure orders so far this year and expects to reach $9 billion by year-end. Cisco will cut fewer than 4,000 jobs, which is less than 5% of its total workforce. The company plans to invest in silicon, optics, security, and AI technologies.
UBS warns AI stocks face risks as growth expectations rise
UBS warns that AI stocks may be overvalued as growth expectations become unrealistic. The bank notes that major tech companies are shifting to asset-heavy models, which could lower future returns. Semiconductor stocks are showing record returns that history says are rarely sustained long-term. UBS suggests investors should diversify into sectors like power providers and non-tech stocks.
UBS warns AI stocks face risks as growth expectations rise
UBS warns that AI stocks may be overvalued as growth expectations become unrealistic. The bank notes that major tech companies are shifting to asset-heavy models, which could lower future returns. Semiconductor stocks are showing record returns that history says are rarely sustained long-term. UBS suggests investors should diversify into sectors like power providers and non-tech stocks.
Commercial real estate uses AI but lacks trust in deals
A new study shows that 66% of commercial real estate professionals use AI weekly or daily. However, only 5% trust AI enough to make actual deal decisions. The top uses for AI include property valuation, market analysis, and risk assessment. Professionals cite a lack of transparency, explainability, and accountability as reasons for not trusting the technology.
Cisco AI orders reach $9 billion as stock hits record
Cisco's forecast for AI orders has reached $9 billion, driving its stock to a record high. The networking giant reported strong third-quarter earnings that beat analyst expectations. CEO Chuck Robbins stated the company is investing heavily in AI infrastructure to capture growing demand. Cisco's stock has risen more than 50% since the start of the year.
AI stocks pause as investors await Nvidia earnings
AI-linked stocks cooled off on Friday as investors waited for Nvidia's upcoming earnings report. The iShares Semiconductor ETF dropped nearly 4% while the Roundhill Memory ETF fell almost 7%. Rising bond yields and concerns about market valuations may be weighing on the sector. Optimism about strong earnings from big tech companies had previously driven recent gains.
Ariel Investments says AI spending prevents US recession
Charles Bobrinskoy of Ariel Investments says the US economy would likely be in a recession without AI spending. He told CNBC that AI is a key driver of current economic growth. The comment comes as the US faces challenges like a trade war with China and slowing global growth. The Federal Reserve has been raising interest rates to control inflation.
Cerebras AI chip company goes public on Nasdaq
Cerebras officially debuted on the Nasdaq with the ticker symbol CBRS on May 14, 2026. The company's wafer-scale AI chip is 58 times larger than conventional chips. Shares closed about 68% above their IPO price on the first trading day. The company's founder Andrew Feldman has been working on this technology for nearly two decades.
AI stocks surge as Trump expands tech strategy abroad
AI stocks saw a major rally as President Donald Trump announced plans to expand technology strategy in China. Chris Buskirk of 1789 Capital discussed the market rally and an upcoming wave of IPOs. The discussion took place on the 'Mornings with Maria' program on May 14, 2026. The rally reflects growing optimism about AI spending and government support for the sector.
Howard Marks advises staying in market despite high rates
Howard Marks warned that investing in pure-play AI companies today is like buying lottery tickets. The veteran investor noted there is no guarantee investors will benefit from AI's economic impact. Marks is known for predicting the dot-com bubble burst at its peak. He suggests investors remain cautious despite the potential for AI to reshape the global economy.
Pizza Hut franchisee sues over AI delivery system failures
Chaac Pizza Northeast sued Pizza Hut, claiming its Dragontail AI system caused $100 million in damages. The franchisee alleges the system caused operational breakdowns and slowed delivery times. Chaac operates 111 Pizza Hut locations in the New York area and relied heavily on DoorDash for deliveries. The lawsuit was filed in the Business Court of Texas First Division in May 2026.
Sources
- Cisco Is Cutting Staff to Prioritize AI Investments as Data Center Orders Surge. The Stock is Soaring
- Cisco to cut thousands of jobs as AI push accelerates after earnings beat
- Cisco raises annual revenue forecast
- UBS warns AI stocks are overheating as growth expectations collide with history
- UBS warns AI stocks are overheating as growth expectations collide with history
- CRE AI Adoption Surges, But Trust Gap Limits Use In Deal Decisions
- Cisco’s AI orders forecast just hit $9 billion—and the stock surged
- The AI Trade Takes a Breather to End the Week
- Probably would be in recession without AI spending, says Ariel Investments' Bobrinskoy
- A Decade-Long Bet on Cerebras: How the “Wafer-Scale AI Chip” Made Its Way to Nasdaq
- AI stocks explode, IPO wave incoming as Trump expands tech strategy abroad
- Stay in market despite rising interest rates: Howard Marks
- Pizza Hut franchisee says AI caused $100M in damages
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