Cisco cuts 4,000 jobs and goes all in on infrastructure AI

The Timeline of an Announced Restructuring

On May 14, 2026, Cisco confirmed the elimination of nearly 4,000 positions. According to TechCrunch, the CEO put the decision in context with positive growth figures. In fact, the company posted record quarterly revenue over the same period.

However, this isn't Cisco's first recent restructuring. In 2024 and 2025, the company had already launched workforce reduction rounds. The pattern is clear: Cisco is scaling back traditional operating areas to fund its transition to AI.

In particular, resources are being reallocated on three fronts. First, in-house development of AI-native networking solutions. Second, integrating machine learning into the security platform. Third, potential strategic acquisitions in network observability and automation.

Record Revenue and Layoffs at the Same Time: A Paradox in Appearance Only

At first glance, cutting thousands of employees while announcing record revenue seems contradictory. In reality, this model has become standard across the global tech industry. That's why it's worth a closer look.

Large tech companies now operate with a portfolio shift logic. Some business units mature and generate cash. Other emerging units require massive investment. As a result, the cuts don't signal weakness, but a reallocation of human and financial capital.

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

What Cisco Is Building with These Investments

Cisco's strategic direction points to AI-driven networking. In short, the goal is to make corporate networks able to self-optimize, detect anomalies and respond to security incidents autonomously.

On top of that, Cisco is strengthening its Splunk platform, acquired last year for about $28 billion. Combining Splunk with Cisco's AI capabilities creates a highly competitive observability and security stack. So the enterprise cloud security market is set to change quickly.

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 that demand early.

Winners and Losers in the New Ecosystem

In this scenario, not every market player is in the same position. So it helps to distinguish who gains and who risks losing ground.

The potential winners are system integrators able to work with advanced Cisco stacks. Among them, SMEs adopting cloud-first network and security solutions can also benefit from smarter, more automated products. In addition, Cisco-certified partners investing in AI training today will have a significant competitive edge over the next 18-24 months.

The potential losers are the companies that stay anchored to legacy infrastructure. Unlike those who upgrade, they'll end up managing systems that are less and less supported and more and more vulnerable. For this reason, the pressure to modernize technology will only grow.

What's more, Cisco's competitors, such as 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.

The SHM Studio take: what changes for Italian SMEs

At SHM Studio, we follow these strategic moves closely. The reason is simple: within 12-18 months, the decisions of big tech vendors turn into concrete changes in what's available to SMEs.

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

In addition, SMEs running hybrid infrastructures, part on-premise and part cloud, will need to rethink their network architectures. This doesn't necessarily mean replacing all existing hardware. It means planning an upgrade roadmap that fits the new AI capabilities available.

Finally, digital presence and technology infrastructure are increasingly intertwined. A company investing in SEO, Google Ads campaigns or LinkedIn campaigns needs a reliable, secure technology foundation.

The Open Question: Where Cisco Hasn't Answered Yet

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

The second issue is the pricing model. AI-native solutions tend to move toward subscriptions and recurring licenses. So SMEs used to one-time hardware investments will need to rethink their IT budget models.

Third, and perhaps most relevant, is the issue of in-house skills. Harvard Business Review has pointed out that the main obstacle to AI adoption in business isn't technological, but organizational. So even the best Cisco infrastructure won't create value without people who can interpret its data.

Next Moves: What to Do Now

For Italian SMEs operating in B2B or structured retail, this moment calls for a clear-eyed assessment. It's not about chasing every new technology. It's about understanding which investments make sense in your specific context.

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

Next, it's worth talking with your technology partners to understand how Cisco's changes will affect existing contracts and service levels. It's also worth exploring the opportunities offered by applied artificial intelligence in marketing and communication processes, which run alongside infrastructure developments.

At SHM Studio, we support SMEs through this strategic orientation process. From analyzing your web presence to defining SEO content strategies, our approach combines the digital dimension with a careful reading of market technology trends. To learn more, check out our blog or contact us directly.