Cisco's AI boom sends S&P 500 to record high amid job cuts
U.S. markets surged on May 14, 2023, with the S&P 500 hitting a record high of 7,517.12 points. Cisco Systems led the rally, posting its biggest single-day gain in over a decade after announcing strong AI-driven growth and job cuts to refocus its business. The jump in Cisco’s stock price—17.2% in one day—marked its sharpest rise since 2011. The company revealed it had secured $5.3 billion in AI infrastructure orders since January, with expectations to reach $9 billion by year-end. At the same time, Cisco raised its revenue forecast and announced plans to cut thousands of jobs, shifting resources toward artificial intelligence development.
The broader market’s gains were largely driven by AI-related stocks. A Bloomberg Intelligence index of 44 AI companies has been responsible for most of the S&P 500’s profit growth since 2024 and margin expansion since 2022. Yet, investor Michael Burry cautioned that tech valuations, particularly in semiconductor stocks, had become unsustainable, warning of a potential market crash. Meanwhile, U.S.-China economic relations took centre stage as President Donald Trump met with Chinese leader Xi Jinping in China. Top tech executives attended the discussions, which included talks on trade policies. U.S. Treasury Secretary Scott Bessen later disclosed plans for a fast-track approval process for certain Chinese investments and possible tariff reductions on select goods. Following the meeting, Trump extended an invitation for Xi to visit the White House in September.
Cisco’s record-breaking stock surge and the S&P 500’s new high reflect strong confidence in AI-driven growth. The company’s shift toward artificial intelligence and cost-cutting measures signals a major strategic pivot. At the same time, ongoing U.S.-China trade discussions could reshape economic ties between the two nations in the coming months.
