Cisco Beats Sales Outlook, Citing ‘Broad-Based’ Record Demand

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Cisco Systems Inc. gave a sales projection for the current quarter that far exceeded Wall Street's expectations, a sign of success for the company's efforts to supply a larger share of the AI data center market with its networking gear. Revenue will be $18 billion to $18.2 billion in the fiscal first quarter, which runs through October, the company said in a statement Wednesday, well above analysts' estimates of $16.8 billion on average. Profit, excluding some items, will be $1.32 to $1.34, compared with projections of $1.17 a share on average. The company in a statement attributed the strong sales to "broad-based, record high demand for Cisco technology." Cisco, the world's largest maker of networking equipment, has been restructuring in an attempt to score more contracts tied to the global buildout of data centers that power artificial intelligence systems. The new focus has helped the company land new clients including ones overseeing government-led AI projects. "We expect AI momentum to remain strong," Bloomberg Intelligence analyst Woo Jin Ho wrote in a note. Cisco shares gained 1% to $125.19 in late trading. The stock was up 61% this year through Wednesday's close. Despite its focus on supplying AI data centers, Cisco still depends on its older, traditional networking business for sales. In the fiscal fourth quarter, which ended in July, sales rose 18% from a year earlier to $17.3 billion. Profit gained to $1.22 a share, excluding some items. Analysts had predicted revenue of $16.8 billion and earnings of $1.17 a share. Earlier this year, Cisco announced a reorganization to focus more closely on the AI market and estimated that related job cuts would result in as much as $1 billion in severance costs and other one-time expenses. Cisco has been building its Silicon One line of networking chips, and orders are benefiting from a short supply of Broadcom's rival products, Raymond James analyst Simon Leopold said in a note, while expressing concerns about the performance of the company's security business and sales tied to traditional campus networking products.

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Record demand for Cisco technology, driven by AI data center buildout, leads to strong sales outlook.

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