Cisco Gains After CEO Points to Headway in AI and Security
Cisco Systems Inc., the largest maker of computer networking equipment, rose the most in six months after the company outlined headway in AI and security technology, helping ease concerns about a sales slowdown.
Cisco, which reported fiscal fourth-quarter results Wednesday, is coming off a spike in demand fueled by the end of pandemic-era supply shortages. Though growth is now decelerating sharply from last year's surge, Chief Executive Officer Chuck Robbins pointed to a bright future where revenue is more consistent — thanks to subscription-based services — and Cisco capitalizes on the transition to AI-focused data centers.
The company said it has already recorded $500 million in orders for AI products, which it offers to so-called hyperscaler customers — large cloud-computing service providers.
“Cisco is committed to helping our customers navigate this transition in a trusted and responsible way to deliver on the full promise of this technology, and we are well positioned to win,” Robbins said on a conference call with analysts.
That outlook helped send the stock up as much as 5.4% in New York on Thursday morning, the most since February, following an initial decline when the quarterly report was released. The company also said it plans to keep increasing share repurchases and dividends.
Cisco shares had closed at $52.96 in regular trading Wednesday, leaving it up 11% this year.
In the period ending in October, sales will rise to about $14.6 billion. That's in line with analysts' estimates of $14.57 billion. Excluding certain items, profit will be roughly $1.03 a share, compared with an average estimate of 99 cents.
Cisco's gross margin has been a bright spot. It's expected to be 65% to 66% this quarter on an adjusted basis,
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