(Bloomberg/Dina Bass) — Cisco Systems Inc. shares rallied after the company issued a solid forecast for revenue in the current quarter, a sign the largest seller of networking gear is benefiting from demand for systems using artificial-intelligence technology.
Sales in the period ending in July will be $14.5 billion to $14.7 billion, Cisco said in a statement Wednesday. Analysts polled by Bloomberg had predicted $14.5 billion on average. Profit, excluding some items will be as high as 98 cents a share, compared with an average analyst estimate of 95 cents.
Cisco is getting a boost from corporations and cloud computing providers expanding their networks — in part to handle a surge in artificial intelligence software. The outlook suggests that spending will continue even as some large data center operators, like Microsoft Corp., pare back certain projects and some corporations hold off spending amid uncertainly about the economy and tariffs.
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Cisco’s shares were up 5.2% at 64.46 at 9:45 a.m. New York time. They’ve gained nearly 9% this year.
Under Chief Executive Officer Chuck Robbins, Cisco has also been trying to expand in areas like cybersecurity and remote management tools, which are hosted in the cloud and have helped add billions of dollars in recurring revenue.
“The momentum we are seeing with AI is fueled by the power of our secure networking portfolio, our trusted global partnerships and the value we bring to our customers,” Robbins said in the statement.
Separately, Cisco announced some executive changes, including the departure of Scott Herren as chief financial officer. He notified the company this month of his plan to retire July 26. He will be succeeded by Mark Patterson, 55, an executive who has been at the company since 2000.
The company also named Jeetu Patel as president and chief product officer, effective Wednesday. The 53-year-old previously held the product role, but as an executive vice president.
Cisco’s switches and routers are key pieces of equipment that direct data traffic in and out of networks and around the internet. The company has also pushed further into software and services, a shift accelerated by last year’s acquisition of the data-crunching business Splunk.
Sales rose 11% to $14.1 billion in the fiscal third quarter, which ended April 26, in line with the average estimate. Profit climbed to 96 cents a share, minus some items. Wall Street projected 92 cents.
Cisco’s product orders rose 20% from a year ago. Minus the contribution from Splunk, new orders were up 9%, the company said.
The company also said that its forecasts include the effect of tariffs “based on current trade policy.” The impact of those levies — and broader uncertainty about the economy — has weighed on the outlooks of other tech companies.
Robbins said that Cisco hasn’t seen “meaningful change” in how customers are making purchases.
“We haven’t seen any customers really fundamentally slowing down,” he said during a conference call with analysts. “The AI transition is so important that they’re going to continue to spin until they absolutely have to stop.”
The company also offered more details on a partnership announced Tuesday with Saudi Arabia’s Humain, a firm created to promote AI in that country. Robbins said that the companies are talking about having Cisco provide networking products, as well as computing power, security and other services.
Overall, Humain will probably spend “hundreds of billions” on its AI efforts, Robbins said. It could ultimately be as big as the major web providers in the US, he said.
Though other US tech companies — like Advanced Micro Devices Inc. and Amazon.com Inc. — put a dollar figure on their work with Humain, Cisco did not. The partnership is in the “early days,” Herren said in an interview.
(Updates with share move throughout)
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