Tech Company Lays Off 5,500 Workers to Invest More in AI, Despite Making $10.3 Billion in Profit

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Despite tech conglomerate Cisco posting $10.3 billion in profits in 2026, the company is laying off 5,500 workers to accelerate investment in AI, SFGATE reports.

This move aligns Cisco with other major firms, including Microsoft and Intuit (the maker of TurboTax), that have cited AI initiatives as a key reason for significant workforce reductions.

Details of the Latest Layoffs

The latest round of cuts was disclosed in a notice filed with the Securities and Exchange Commission this week and will affect seven percent of Cisco’s global staff.

In a brief statement, CEO Chuck Robbins referenced “AI” five times, underscoring the company’s determination to remain competitive in the fast-moving artificial-intelligence sector.

Earlier in 2026, Cisco had already reduced its workforce by 4,000 positions—five percent of total headcount—stating that the goal was to “realign the organization and enable further investment in key priority areas.”

In short, companies are increasingly open about their plans to substitute human roles with AI, a trend that raises concerns for employees seeking long-term job security. Whether these restructurings will deliver sustained returns is still uncertain.

Red Herring

The layoff announcement helped lift Cisco’s stock price on Wednesday, moving from $45.04 at the open to more than $48 per share in after-hours trading.

Similar share-price gains have followed layoff news from other technology companies in recent quarters.

Cisco’s actions also reflect a broader industry pattern: firms announce they are reallocating resources to AI projects and simultaneously trim staff under the banner of restructuring.

While many companies publicly frame these changes as AI-driven, experts question whether the technology is the true driver or merely a convenient narrative.

“Fighting against robots is a nice cover story,” University of Oxford economist and data scientist Fabian Stephany told Business Insider earlier in 2026. “But if you have a closer look, it’s often old-school, simple economic dynamics like outsourcing or cost-cutting to increase salaries in other places.”

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