A logo of CISCO sits outside the company's house on the opening day of the 55th annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 20, 2025. REUTERS/Yves Herman/File Photo
(Reuters) -Cisco Systems raised its annual revenue forecast on Wednesday, betting on higher demand for its cloud networking gear amid a boom in the artificial intelligence technology, sending its shares up nearly 7% in extended trading.
Corporate customers have been investing billions of dollars in building AI infrastructure to speed up their digital transformation, boosting demand for data centers, which use Cisco's products such as ethernet switches and routers.
"Cisco's solid forecast should lift its share price and be a boost in the arm for AI and technology companies in general," said Michael Ashley Schulman, chief investment officer at Running Point Capital.
Earlier this week, Cisco partnered with French technology and AI firm Mistral to jointly launch an AI agent for automating tasks and streamlining workflow.
It launched Cisco AI Defense in January, aimed at safeguarding enterprises against the misuse of AI tools, data leakage and increasingly sophisticated threats.
"Business customers are upgrading their networks to support AI initiatives, offsetting reduced federal government spending following the administration change; this shift in customer mix has helped maintain momentum despite Washington's project delays," Schulman said.
The San Jose, California-based company expects its revenue to be between $56 billion and $56.5 billion for fiscal 2025, compared with its prior forecast of $55.3 billion to $56.3 billion. Analysts, on average, expect $55.99 billion, according to data compiled by LSEG.
For the third quarter, it forecasts revenue in the range of $13.9 billion to $14.1 billion, compared with the estimate of $13.87 billion.
"As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements and adopt best-in-class AI security," said CEO Chuck Robbins.
Revenue for the second quarter ended January 25 was $14 billion, ahead of analysts' estimate of $13.87 billion.
(Reporting by Juby Babu in Mexico City; Editing by Shilpi Majumdar)
