Cisco stock surges 7% on raised outlook fuelled by booming AI data center demand
News Summary
Cisco Systems has raised its annual revenue and profit outlook, now expecting fiscal-year revenue between $60.2 billion and $61 billion and adjusted earnings per share of $4.08 to $4.14, primarily driven by surging demand for networking gear in AI data centers. The company's stock rose over 7% in both Frankfurt and after-hours US trading. Cisco reported a sharp rise in AI infrastructure orders from hyperscale customers, reaching $1.3 billion, up from $800 million in the prior quarter. CFO Mark Patterson highlighted Cisco's growing relevance in AI and strong demand for refreshed networking products, while CEO Chuck Robbins stated that AI-related demand is driving Cisco toward its strongest fiscal year yet. For the fiscal first quarter, Cisco exceeded analyst estimates for both profit and revenue, and projected second-quarter revenue and adjusted earnings above market expectations. To strengthen its position in the AI infrastructure space, Cisco is revamping its chips and networking equipment and has partnered with Nvidia Corp. Additionally, Cisco has bolstered its software and security solutions through the acquisition of Splunk Inc. earlier this year and launched a
Background
Cisco Systems, Inc. is a leading American digital technology major, renowned for its networking hardware, playing a critical role in enterprise and data center infrastructure globally. Currently, there is an explosion in AI-driven computing demand worldwide, particularly within hyperscale data centers. This has led to unprecedented demand for high-performance, high-bandwidth networking infrastructure essential for connecting and supporting complex AI workloads. Cisco is actively reorienting its product portfolio to capitalize on this market opportunity. In response to market shifts and competition, Cisco has been strategically transitioning towards software and security solutions in recent years to reduce its reliance on traditional hardware sales. Its $28 billion acquisition of cybersecurity and data analytics firm Splunk earlier in 2025 is a significant part of this strategy. In the AI infrastructure sector, Cisco competes with companies like Broadcom Inc. and Hewlett Packard Enterprise Co. (which owns Juniper Networks) and has sought to strengthen its market position through a partnership with leading AI chip supplier Nvidia Corp.
In-Depth AI Insights
What are the deeper strategic implications behind Cisco's AI-driven growth beyond immediate revenue spikes? - Cisco's robust AI growth is not merely a short-term revenue boost but a crucial validation of its multi-year strategic transformation. By partnering with Nvidia and revamping its chips and networking equipment, Cisco is tightly integrating its core networking capabilities with the cutting-edge demands of AI computing, shifting from a traditional hardware vendor to a comprehensive AI infrastructure enabler. - The launch of its