Cisco Systems has updated its annual forecast for profit and revenue, driven by strong demand for networking equipment amidst an AI-driven surge in data center expansions. On Wednesday, shares of the company, a key supplier to various cloud, enterprise, and communication service providers, surged over 7% in after-hours trading, marking a 25% increase in value since the beginning of the year.
Cisco’s Financial Outlook
The company anticipates fiscal 2026 revenue between $60.2 billion and $61 billion, an increase from its previous estimate of $59 billion to $60 billion. Cisco has also adjusted its projected annual adjusted earnings per share to between $4.08 and $4.14, up from the earlier range of $4 to $4.06.
AI Demand Fuels Growth
Cisco’s CEO, Chuck Robbins, highlighted that the demand for AI infrastructure is significant. He stated that the company expects to generate $3 billion in AI infrastructure revenue from hyperscalers by fiscal 2026. Furthermore, Cisco secured over $2 billion in AI orders in fiscal 2025, primarily from hyperscalers.
Emerging Opportunities
The company is witnessing a robust pipeline, exceeding $2 billion for its high-performance networking products, spanning various sectors including sovereign, neocloud, and enterprise customers. Ryan Lee, a senior vice president at Direxion, noted that despite Cisco’s mature networking business, the AI boom and product refreshes are acting as catalysts for strong sales.
Investing in AI Infrastructure
Leading tech companies such as Alphabet, Microsoft, Meta, and Amazon are increasing their capital expenditure, investing heavily in data centers and advanced chips. This trend underscores the booming demand for AI-driven networking solutions.
Recent Developments
- Cisco launched the “Cisco Unified Edge” platform to run AI workloads in local settings such as retail and healthcare.
- The company’s first-quarter revenue was reported at $14.88 billion, exceeding analyst estimates of $14.77 billion.
- AI infrastructure orders from hyperscalers amounted to $1.3 billion for the quarter ending October 25.
Cisco appears well-positioned to capture the expanding market driven by AI investments, reinforcing its status as a leader in the networking sector.
