Good morning. It took Cisco nearly 26 years to reclaim its March 2000 peak. It’s taken just five months to leave it in the dust.
Shares of the networking giant in business for over 40 years surged more than 13% Thursday to an intraday record of $119.36, capping one of the most improbable turnaround stories in modern market history. The catalyst: a Q3 earnings report that showed CEO Chuck Robbins’ multi-year bet on AI infrastructure is paying off.
Record revenue of $15.8 billion, up 12% year-over-year, topped the high end of guidance. Management raised the FY26 AI revenue target to $4 billion (from $3 billion) and lifted AI orders guidance to $9 billion (from $5 billion). Q4 revenue guidance of up to $16.9 billion came in above consensus, and non-GAAP operating income hit a record. The company also announced on Wednesday a Q4 workforce reduction of fewer than 4,000 jobs—less than 5% of total headcount. Cisco frames the cuts as an AI-driven strategic shift, which reallocates investment toward AI infrastructure, silicon, optics, and security, rather than AI directly replacing workers. Morningstar, which rates Cisco a wide moat, just raised fair value to $90 from $75.
Founded in 1984, Cisco was once the backbone of the internet—and briefly the most valuable company in the world during the dot-com era, before the bubble burst. Read more about Cisco’s road to AI here.
Cisco’s comeback reflects a broader reckoning. BCG’s research finds just 5% of companies are “AI future-built,” capturing 5x the revenue gains and 3x the cost reductions of their peers. MIT Sloan’s manufacturing study documented an “AI adoption J-curve”—short-term losses are steeper for older, established companies, but early adopters outperform peers on productivity and market share over four-plus-year horizons. Cisco’s multi-year pivot is finally paying off, just as that pattern suggested.
Have a good weekend. Sheryl Estrada [email protected]
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