Cisco Systems shares jumped 17% in extended trading following a quarterly performance that soundly beat analyst expectations. The networking hardware leader reported $15.84 billion in revenue for the quarter, exceeding the $15.56 billion consensus estimate and marking a 12% year-over-year increase. Net income also saw a notable boost, rising to $3.37 billion, or 85 cents per share, from the $2.49 billion recorded in the same period last year.

The surge in investor confidence is largely attributed to the company’s aggressive expansion into the artificial intelligence sector. Cisco reported that it has already secured $5.3 billion in AI infrastructure and hyperscaler orders this year. As a result, the company has raised its full-year forecast for these orders to $9 billion, up from a previous projection of $5 billion. Additionally, the firm updated its expected fiscal-year revenue from the AI market segment to $4 billion, signaling a strategic pivot toward next-generation networking switches and routers built specifically for the AI era.

Despite the positive financial trajectory, Cisco announced a workforce reduction affecting fewer than 4,000 employees, representing less than 5% of its global staff. This restructuring will result in approximately $1 billion in pre-tax charges, with a significant portion allocated to the fourth fiscal quarter. CEO Chuck Robbins noted that these difficult decisions are essential to maintaining organizational agility and focusing resources on the most high-growth areas of the business.

Looking toward the future, the company provided a strong outlook for the fiscal fourth quarter, anticipating adjusted earnings per share between $1.16 and $1.18 on revenue projections of $16.7 billion to $16.9 billion. These figures surpass current market estimates, bolstered by a 25% growth in networking revenue to $8.82 billion and steady performance in the security segment.