Cisco raises annual forecast on AI-driven demand for networking gear
A man passes under a Cisco logo at the Mobile World Congress in Barcelona, Spain February 25, 2019. REUTERS/Sergio Perez
Cisco Systems raised full-year forecast for profit and revenue on Wednesday, betting on robust demand for its networking equipment driven by multi-billion-dollar data center expansions amid the artificial intelligence boom.
Shares of the company, a supplier to cloud, enterprise and communication services providers, rose more than 7 per cent in extended trading. They have risen 25 per cent so far this year.
Companies such as Cisco have been benefiting as businesses rapidly migrate workloads to the cloud and pour billions into upgrading campus infrastructure in response to surging adoption of AI models.
Cisco expects $3 billion in AI infrastructure revenue from hyperscalers in fiscal 2026, CEO Chuck Robbins said on a post-earnings call.
It secured more than $2 billion in AI orders, nearly all from hyperscalers, in fiscal 2025.
"We are see a growing pipeline in excess of $2 billion for our high-performance networking products across sovereign, neocloud and enterprise customers," Robbins said.
Tech giants Alphabet, Microsoft, Meta and Amazon have all signaled plans to boost annual capital spending as they invest heavily in data centers and advanced chips.
Cisco expects fiscal 2026 revenue between $60.2 billion and $61 billion, compared with $59 billion to $60 billion projected earlier.
It forecast annual adjusted per-share earnings at $4.08 to $4.14, compared with $4 to $4.06 earlier.
Cisco appears poised to capture its fair share of the seemingly endless AI-spend in Silicon Valley, said Ryan Lee, senior vice-president of product and strategy at Direxion in New York.
"While the networking business is rather mature, Cisco is seeing nice sales catalysts via the AI boom and some product refreshes," Lee said.
Earlier this month, Cisco launched a new computing platform, "Cisco Unified Edge", which would run AI workloads at local entities such as retail stores, factory floors and healthcare facilities.
The company's first-quarter revenue stood at $14.88 billion, while analysts estimated $14.77 billion, according to data compiled by LSEG.
AI infrastructure orders from hyperscalers totaled $1.3 billion during the quarter ended October 25.
