Cisco sees AI sales picking up but sticks to cautious outlook
Revenue will range from US$59 billion to US$60 billion in the fiscal year that runs to July 2026, the company said on Wednesday (Aug 13). That's in line with the average Wall Street estimate of US$59.5 billion, though some analysts were looking for more than US$61 billion.
The guidance assumes that current tariffs remain in place till the end of 2026, chief financial officer Mark Patterson said on a call with analysts. 'We will continue to leverage our world-class supply-chain team to help mitigate the impact of tariffs where appropriate,' he said.
The shares fluctuated in late trading after the report was released, rising about 1 per cent after an earlier decline. Cisco had been up 19 per cent this year to the close.
Like many peers, Cisco is working to benefit from booming AI spending. The company said on Wednesday that it recognised about US$1 billion in AI revenue in fiscal 2025. Still, the area is becoming increasingly competitive. Companies such as Broadcom and Hewlett Packard Enterprise, which last month completed its acquisition of Juniper Networks, are looking to serve the same markets.
In the fiscal fourth quarter, which ended Jul 26, revenue rose 7.6 per cent to US$14.7 billion. Profit was 99 US cents a share, excluding some items. That compares with estimates of US$14.6 billion for sales and 98 US cents a share for earnings, according to data compiled by Bloomberg.
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Federal business should return to growth during the new fiscal year, chief executive officer Chuck Robbins said on the call. Technology firms have been grappling with changes to government procurement due to the Trump administration's cost-cutting efforts.
To spread Cisco's bets, Robbins has bolstered the company's security and monitoring software by acquiring Splunk for US$28 billion in 2024.
For now, Cisco is not seeing the same surge in AI-fuelled investor interest that some tech peers are, David Bahnsen, chief investment officer of the Bahnsen Group, said. But the company has 'a future growth play they are very well positioned for', he said.
AI infrastructure orders from large cloud providers were over US$800 million in the quarter, the company said. That's an increase from US$600 million in the prior quarter.
Cisco has inked partnerships with Saudi Arabia's AI company, Humain, and has said that it will play a role in the Stargate project in the United Arab Emirates. These Middle East partnerships will ramp up in the second half of fiscal 2026, Robbins said on the call.
Cisco will be a 'core system provider' for training AI software and operating it at a massive scale, he said. BLOOMBERG
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