Cisco Systems is eliminating over 4,000 jobs, representing 5% of its workforce of 84,900, as the company adjusts to a shift towards artificial intelligence. This move follows previous layoffs in late 2022, shedding 5,000 workers, and comes ahead of Cisco's $28 billion acquisition of Splunk, expected to finalize by April 30. The restructuring, which Cisco estimates will cost $800 million, highlights a broader trend of tech companies trimming their workforce to boost profits and stock prices.

Despite these reductions, Cisco, based in San Jose, reported a 5% drop in net income to $2.6 billion for its fiscal second quarter, with revenue falling 6% to $12.8 billion. CEO Chuck Robbins noted that customers are adopting a more cautious approach due to economic uncertainty, expecting subdued demand for the next three to six months.

Cisco layoffs are part of a larger pattern seen across major tech firms like Microsoft, Google, and Amazon, which have also cut jobs since late 2022. These reductions have helped these companies increase their profitability and market values, despite the robust job growth in the U.S., which keeps the unemployment rate at 3.7%.

Cisco’s stock, which has risen just 6% since the end of 2022, saw a nearly 6% drop in after-hours trading following its latest quarterly results and outlook. Amid these layoffs, Cisco is focusing on AI and technologies poised for future growth, aligning with its partnership with Nvidia, a leader in AI innovation. Robbins emphasized that this strategy positions Cisco to leverage AI advancements effectively.