Cisco is seeing further growth in demand for network equipment as companies worldwide expand their data centers and accelerate AI projects.
The stock got a solid boost in premarket trading on Thursday, climbing more than 7% after the US networking giant raised its revenue and profit forecasts for the current fiscal year. According to Reuters, this confirms the growing role that AI infrastructure plays in the strategy of both cloud providers and enterprises.
The recent quarter, which ended on October 25, generated revenue of $14.88 billion. This was slightly above analysts’ estimates. Cisco is extending this trend to the longer term and expects to generate revenue of between $60.2 billion and $61 billion in fiscal 2026, which is higher than the previously established range. Earnings per share forecasts have also been adjusted to between $4.08 and $4.14.
CEO Chuck Robbins (photo) indicated that Cisco has already secured more than $2 billion in AI-related orders this year, almost entirely from hyperscalers. Cisco expects $3 billion in revenue from AI infrastructure by 2026. According to Robbins, the sales opportunity for high-speed network technology is also growing among government clouds, commercial cloud providers, and large enterprises, with the company citing a pipeline that now exceeds $2 billion.
J.P. Morgan stated in an analysis that increasing demand from enterprises is likely to accelerate the renewal of campus networks. The bank noted that investors are particularly focused on the pace at which AI orders are coming in and that this is rising faster than expected.
Local AI models
In addition to strong demand, Cisco also announced new technology. The company introduced Unified Edge, a platform designed to run AI applications close to the user, for example in stores, healthcare locations, and manufacturing environments. With this, Cisco aims to respond to organizations that want to run AI models locally for lower latency and more control over data.
The broader market is working in Cisco’s favor. Major technology companies such as Alphabet, Microsoft, Meta, and Amazon have announced plans to further increase their investments in data centers and advanced chips. These plans are creating additional demand for network equipment to support the new generations of AI systems.
Despite a weak start to the year, Cisco’s share price has since rebounded and continues to rise steadily in the second half of the year. With a forward price-earnings ratio of 17.7, the company is valued lower than Arista Networks but above Dell Technologies. According to analysts, this indicates that the market has confidence in Cisco’s AI prospects but that there is still room for further growth.