Cisco Shares Surge 14% as AI Demand Drives 'Networking Supercycle'
Quick Look
Cisco CEO Chuck Robbins cites skyrocketing AI demand for a 'networking supercycle', driving shares up 14% after beating AI infrastructure guidance, lifting forecasts to $9B, and announcing a 5% workforce cut to focus on AI, silicon, and optics.
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Why It Matters
Cisco's recent performance has been overshadowed by Nvidia in the AI sector, but the company is regaining traction with its networking infrastructure for data centers and AI applications.
Cisco CEO Chuck Robbins told CNBC on Thursday that skyrocketing demand for artificial intelligence tools and equipment is powering the industry toward a "networking supercycle." Shares jumped 14% and headed for their best day in more than two decades after Cisco blew past its AI infrastructure and hyperscaler guidance orders for the fiscal year and lifted its forecast from $5 billion to $9 billion. The California-based networking equipment maker also said it will cut about 5% of its workforce as it shifts focus toward AI-focused segments, silicon, and optics. "Given the speed at which the market is moving, we need to make a rapid reallocation of resources," Robbins told CNBC. "By the way, a lot of the people that are potentially impacted will actually go take those jobs." Cisco has lagged its hyperscaler peers in the AI race being led by Nvidia . But the company recently surpassed its internet boom highs as investors bet on its networking infrastructure needed to run data centers, and the AI trade broadens. Robbins said the "dynamic" nature of the AI market makes it difficult to lock in forward bookings projections and that the company has opted out of some projects with hyperscalers. "We don't have visibility completely yet, but we have enough understanding of our relationship and the design wins and what their capital commitments are that we feel good about where we're headed," he said. Robbins also commented on the Mythos hysteria that's swept up financial markets and led to White House meetings with top tech leaders. He said the company is now discussing the AI model with every customer. Cisco is a part of Anthropic's Project Glasswing, which gave access to a select group of businesses last month to test the model and its cybersecurity implications. Worries about the potential risks and vulnerabilities exploited by the model has forced businesses to speed up security upgrades. "You have to be agile, and you have to be ready to move," Robbins said.
What to Watch
AI outlook — possibilities, not facts
Increased Investment in AI Infrastructure
Likely · Short term
Open Questions
- How will the 5% workforce cut affect Cisco's long-term product development?
- What are the specifics of Cisco's involvement in Anthropic's Project Glasswing?
