Cisco Forecasts Strong Quarter as AI Demand Bolsters Networking Business

Cisco Systems has projected revenue and profit for the upcoming quarter that exceeds Wall Street expectations, buoyed by strong demand for networking equipment driven by the artificial intelligence boom. This comes as the company reported solid first-quarter earnings, signaling resilience in its core business amid challenging market conditions. 

Despite a 1.4% dip in its share price in extended trading, Cisco’s annual revenue guidance aligns with industry estimates, demonstrating confidence in its growth trajectory. As companies expand investments in AI and data centers, demand for Cisco’s networking products—particularly Internet switches and routers—has surged, offsetting a general post-pandemic slowdown. 

The California-based networking giant has been actively diversifying its portfolio to reduce reliance on traditional networking gear. Challenges such as global supply chain disruptions and fluctuating post-pandemic demand have prompted Cisco to broaden its focus, investing in cybersecurity, cloud systems, and AI-driven technologies. This year, Cisco announced two rounds of layoffs to streamline operations as it transitions its strategy. 

A key milestone in Cisco’s shift is its $28 billion acquisition of Splunk, finalized in March. The acquisition is set to strengthen Cisco’s software and cybersecurity capabilities, providing a robust foundation for AI-enhanced offerings. 

For the upcoming quarter, Cisco expects revenue to fall between $13.75 billion and $13.95 billion, surpassing analysts’ consensus of $13.73 billion, according to LSEG data. The company also forecasts an adjusted profit per share of $0.89 to $0.91, exceeding the estimated $0.87 per share. 

In its first fiscal quarter, Cisco reported a 6% decline in revenue to $13.84 billion, outperforming expectations of $13.77 billion. Adjusted earnings of $0.91 per share also surpassed forecasted $0.87 per share. The company has revised its annual revenue outlook to $55.3 billion to $56.3 billion, refining earlier estimates, while adjusting its profit forecast to a range of $3.60 to $3.66 per share. 

Se results highlight Cisco’s adaptability and strategic focus on high-demand sectors such as cybersecurity and AI, positioning it well in a competitive tech landscape.