Cisco stock surges 7% on raised outlook fuelled by booming AI data center demand

Shares of American digital technology major Cisco Systems surged on Thursday after the company lifted its annual profit and revenue outlook, buoyed by surging demand for networking gear used in artificial intelligence data centers.

The stock rose 7% in Frankfurt trading and climbed nearly 7.5% in after-hours US trading.

The networking giant now expects fiscal-year revenue between $60.2 billion and $61 billion, compared with its earlier projection of $59 billion to $60 billion.

Adjusted earnings per share are forecast at $4.08 to $4.14, up from a previous range of $4 to $4.06.

The stronger guidance has sparked optimism that Cisco will play a growing role in the AI infrastructure boom.

The San Jose-based company is revamping its chips and networking equipment to connect vast data centers capable of handling complex AI workloads.

AI orders surge as Cisco eyes hyperscaler demand

Cisco said AI infrastructure orders from hyperscale customers—large cloud providers running massive data centres—reached $1.3 billion, marking a sharp rise from $800 million in the prior quarter.

“Our relevance in AI continues to build,” CFO Mark Patterson said in the press release.

“We have a multi-year, multi-billion-dollar campus refresh opportunity starting to ramp, with strong demand for our refreshed networking products.”

The company is competing with Broadcom Inc. and Hewlett Packard Enterprise Co., which owns Juniper Networks, but has sought to strengthen its position through a partnership with Nvidia Corp., the top supplier of AI chips.

Chief Executive Chuck Robbins said Cisco is on track for its strongest fiscal year yet, driven by AI-related demand.

“The widespread demand for our technologies highlights the critical role of secure networking and the value of our portfolio as customers move quickly to unlock the potential of AI,” Robbins said.

Solid quarterly performance underpins confidence

For the fiscal first quarter, Cisco reported a profit of $2.86 billion, or 72 cents a share, up from $2.71 billion, or 68 cents a share, a year earlier.

Adjusted earnings of $1 per share beat analyst estimates of 98 cents, according to FactSet.

Revenue climbed 8% to $14.88 billion, surpassing forecasts of $14.78 billion. Product revenue rose 10% to $11.1 billion, while services revenue increased 2% to $3.81 billion.

For the second quarter, Cisco projected revenue between $15 billion and $15.2 billion and adjusted earnings of $1.01 to $1.03 a share—both above market expectations.

Analysts bullish on Cisco's AI momentum; see further upside

Robbins has been steering Cisco toward software and security solutions to reduce reliance on hardware sales.

The company completed its $28 billion acquisition of cybersecurity and analytics firm Splunk Inc. earlier this year, strengthening its software footprint.

“While the networking business is rather mature, Cisco is seeing nice sales catalysts via the AI boom and some product refreshes,” said Ryan Lee, senior vice-president of product and strategy at Direxion in New York.

Earlier this month, Cisco launched “Unified Edge,” a new computing platform designed to run AI workloads at local sites such as retail stores, factories, and healthcare facilities.

Bloomberg Intelligence analyst Woo Jin Ho noted that Cisco’s guidance could still prove conservative.

“Cisco’s AI momentum hasn’t abated,” he said, suggesting “room for modest upside.”

Cisco shares have gained more than 24% in 2025 ahead of the results. According to Investor’s Business Daily, the stock trades in a buy zone with an entry point of 72.55.