CISCO Systems raised its annual revenue forecast on Wednesday (Feb 12), betting on higher demand for its cloud networking gear amid an artificial intelligence (AI) boom, sending its shares up nearly 7 per cent in extended trading.
Corporate customers have been investing heavily to build their AI infrastructure, boosting demand for data centres, which use Cisco’s products such as ethernet switches and routers.
“Cisco’s solid forecast should lift its share price and be a boost in the arm for AI and technology companies in general,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.
Earlier this week, Cisco partnered with French AI firm Mistral to jointly launch an AI agent for automating tasks and streamlining workflow. It launched Cisco AI Defense in January to safeguard enterprises against the misuse of AI tools.
“Business customers are upgrading their networks to support AI initiatives, offsetting reduced federal government spending following the administration change; this shift in customer mix has helped maintain momentum despite Washington’s project delays,” Schulman said.
Cisco also approved an increase of US$15 billion for its share buyback programme, taking the total remaining authorised fixed amount for stock repurchases to US$17 billion.
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The company expects fiscal 2025 revenue to be between US$56 billion and US$56.5 billion, compared with the US$55.3 billion to US$56.3 billion forecast earlier. Analysts estimate US$55.99 billion, according to data compiled by LSEG.
It forecast third-quarter revenue at US$13.9 billion to US$14.1 billion, compared with the estimate of US$13.87 billion.
Cisco’s adjusted gross margin forecast for the quarter has the cost of the proposed tariffs built into it, chief financial officer Scott Herren said on a conference call.
US President Donald Trump announced 25 per cent tariffs on most goods from Canada and Mexico on Feb 1, but then paused them for a month while he negotiates with the country’s two biggest trading partners. An additional 10 per cent tariff on China was effective Feb 4.
Cisco’s second-quarter revenue was US$14 billion, ahead of analysts’ estimate of US$13.87 billion. REUTERS
