Cisco cuts 4,000 jobs, bets everything on infrastructure AI

The timeline of an announced renovation

On May 14, 2026, Cisco confirmed the elimination of nearly 4,000 jobs. According to TechCrunch, the CEO contextualized the decision with positive growth data. In fact, the company recorded record quarterly revenues during the same period.

However, this is not Cisco's first recent restructuring. In 2024 and 2025, the company had already initiated staff reduction cycles. Consequently, the pattern is clear: Cisco is cutting back on traditional operational areas to fund its transition to AI.

Specifically, resources are being reallocated on three fronts. First, the internal development of AI-native solutions for networking. Second, the integration of machine learning into the security platform. Third, potential strategic acquisitions in the network observability and automation segment.

Record revenues and simultaneous cuts: a paradox only in appearance

At first glance, cutting thousands of employees while announcing record revenues seems contradictory. In reality, this model has become standard in the global tech industry. Therefore, it is worth analyzing carefully.

Large technology companies operate today with a logic of portfolio shift. Some business units mature and generate cash. Other emerging units require massive investments. Therefore, cuts do not signal weakness, but a reallocation of human and financial capital.

Analogously, McKinsey has documented how companies investing in AI infrastructure tend to compress operating costs in the short term to accelerate medium-term growth. Cisco is following this trajectory exactly.

What is Cisco building with these investments

Cisco's strategic direction aims for AI-driven networking. In essence, the goal is to make enterprise networks capable of self-optimization, anomaly detection, and autonomous response to security incidents.

In addition to this, Cisco is enhancing its Splunk platform, acquired last year for approximately $28 billion. The integration of Splunk with Cisco's AI capabilities creates a very competitive observability and security stack. Therefore, the market for cloud security Enterprise is destined to change rapidly.

Finally, Gartner predicts that by 2027, more than 60% of new enterprise network deployments will include AI-native components. Cisco is positioning itself to capture this demand early on.

Winners and losers in the new ecosystem

In this scenario, not all market players are in the same position. Therefore, it is useful to distinguish who gains and who risks losing ground.

The potential winners System integrators are capable of working with advanced Cisco stacks. Among these, even SMEs that adopt cloud-first network and security solutions can benefit from more intelligent and automated products. Furthermore, Cisco-certified partners who invest in AI training today will have a significant competitive advantage in the next 18-24 months.

The potential losers However, companies that remain anchored to legacy infrastructure will, unlike those that update, find themselves managing systems that are increasingly unsupported and vulnerable. For this reason, the pressure towards technological modernization will increase further.

Among other things, Cisco's competitors—like Juniper Networks, Palo Alto Networks, and Fortinet—are accelerating their AI roadmaps. As a result, the market as a whole will move faster than many Italian SMEs have anticipated.

SHM Studio Reading: What Changes for Italian SMEs

We of SHM Studio We are carefully following these strategic moves. The reason is simple: the decisions of major tech vendors translate, within 12-18 months, into concrete changes in the offerings available to SMEs.

In particular, we identify three operational implications for Italian B2B and retail companies. First of all, the cost of AI-assisted cloud security solutions will tend to decrease in the medium term as Cisco scales production. However, in the short term, the transition will require investment in training and specialized consulting.

Furthermore, SMEs managing hybrid infrastructures—part on-premises, part cloud—will need to review their network architectures. This doesn't necessarily mean replacing all existing hardware. Instead, it means planning an upgrade roadmap that aligns with the new AI capabilities available.

Finally, the size of the digital presence and that of technological infrastructure are increasingly interconnected. A company that invests in SEO, Google Ads campaigns o LinkedIn campaign must be able to rely on a reliable and secure technological base.

The construction site still open: where Cisco has not yet responded

Despite this, some open questions remain that the market will have to solve in the coming quarters. The first concerns the compatibility of new AI solutions with existing installations. Cisco has historically assured good backward compatibility, but the speed of the AI transition could create discontinuities.

The second issue concerns the pricing model. AI-native solutions tend to move towards recurring subscriptions and licenses. Therefore, SMEs accustomed to one-time hardware investments will need to revise their IT budget models.

Third, and perhaps most relevant, is the issue of internal skills. Harvard Business Review has highlighted that the main obstacle to AI adoption in companies is not technological, but organizational. Therefore, even the best Cisco infrastructures will not generate value without people capable of interpreting their data.

Next moves: what's best to do now

For Italian SMEs operating in B2B or structured retail contexts, this moment requires a clear-eyed assessment. It's not about chasing every technological novelty. It's about understanding which investments make sense in one's specific context.

First, it's helpful to map out the current state of your network and security infrastructure. Many medium-sized businesses don't have a clear picture of what they have installed and when. This mapping is the starting point for any informed decision.

Subsequently, it is advisable to discuss with your technology partners how the Cisco innovations will impact existing contracts and service levels. Furthermore, it is worth exploring opportunities related to’artificial intelligence applied in marketing and communication processes, which go hand-in-hand with infrastructure evolutions.

We of SHM Studio We support SMEs in this strategic guidance journey. From the analysis of web presence at the definition of strategies for SEO content, our approach integrates the digital dimension with a careful reading of market technological evolutions. To learn more, you can consult our blog o contact us directly.