While many of its peers in Big Tech seems to be using AI as a justification for cutting jobs, Cisco Systems claims to be taking a different approach. According to CEO Chuck Robbins, the company is not using artificial intelligence to reduce its workforce. “I don’t want to get rid of a bunch of people right now,” Robbins told CNBC, adding that he wants Cisco’s engineers to “innovate faster and be more productive,” which he believes will give the company a competitive advantage. “I just want our engineers that we have today to innovate faster and be more productive. That gives us a competitive advantage,” Cisco CEO said.This contrasts with companies like Microsoft and Amazon, which have recently laid off thousands of employees. Microsoft alone cut about 9,000 jobs in early July. Robbins acknowledged that many of his peers anticipate hiring fewer people in the future as AI technology advances, and he didn’t rule out the possibility for Cisco “down the road.”
What’s driving Cisco’s AI strategy
Cisco’s latest quarterly results suggest that its strategy is working. The company exceeded expectations for both earnings and revenue and provided a positive outlook. A key driver of this success is its focus on AI infrastructure. The company more than doubled its initial $1 billion AI infrastructure order target for fiscal year 2025, with more than $800 million in orders coming in during the fourth quarter alone. These orders are largely from “webscale customers”—major tech companies like Amazon, Meta Platforms, and Microsoft—that are rapidly building out their AI capabilities.Despite the positive news, Cisco’s stock experienced a 1.5% dip on Thursday. The cause was a lackluster performance in its security segment, which missed revenue expectations. The weakness was attributed to budget cuts in the U.S. federal government, which affected Cisco’s business with those agencies. The company had hoped to see more growth from its March 2024 acquisition of the cybersecurity platform Splunk, but the full benefits of that deal have been delayed.Still, the overall picture for Cisco remains strong. The company confirmed it has already secured roughly $1 billion in AI revenue from webscale customers for fiscal year 2025. Cisco, which is a component of the Dow Jones Industrial Average, is a new addition to TheStreet’s portfolio. The investment team sees the company’s role in supporting its customers’ AI initiatives as a significant growth driver.
