Cisco shares climb on strong AI-fueled equipment demand

(Reuters) -Shares of Cisco Systems rose nearly 6% in early trading on Thursday, after the networking equipment maker raised its annual profit and revenue forecast on robust cloud demand.

Cisco, a key supplier to cloud, enterprise and telecom customers, has been riding a wave of AI-driven infrastructure spending as businesses accelerate cloud migrations and upgrade campus networks, which has propelled its shares to gain almost 25% this year.

CEO Chuck Robbins said on Wednesday the company secured more than $2 billion in AI-related orders for fiscal 2025, nearly all from hyperscalers, and expects $3 billion in AI infrastructure revenue in fiscal 2026.

AI infrastructure orders from hyperscalers totaled $1.3 billion during the quarter ended October 25.

"We believe the momentum for Cisco with enterprise customer orders will further reinforce the bull case around a robust campus refresh cycle," J.P. Morgan said.

"But investor focus will still primarily be on the momentum of AI orders which are accelerating at a much more robust pace than anticipated."

Tech giants including Alphabet, Microsoft, Meta and Amazon have signaled plans to boost annual capital spending on data centers and advanced chips, which could act as tailwinds for Cisco.

"We are seeing a growing pipeline in excess of $2 billion for our high-performance networking products across sovereign, neocloud and enterprise customers," Robbins said.

Cisco expects fiscal 2026 revenue between $60.2 billion and $61 billion, compared with $59 billion to $60 billion projected earlier.

Cisco trades at a forward price-to-earnings ratio of 17.73, compared with Arista Networks' 40.90 and Dell Technologies' 12.83.

(Reporting by Kanishka Ajmera in Bengaluru; additional reporting by Danilo Masoni in London; Editing by Amanda Cooper)

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