AI orders surpass $600 million as Cisco System (CSCO) raises full-year outlook.
Cisco Systems delivered a standout performance in its fiscal third quarter, riding strong enterprise demand for artificial intelligence, networking, and cybersecurity products. The company reported revenue of $14.15 billion, an 11% increase from the previous year and ahead of Wall Street’s $14 billion consensus. Adjusted earnings came in at $0.96 per share, beating the $0.92 estimate. The stock surged nearly 6% following the announcement, currently at $64.80 — its highest level since February.
The surge was driven by robust momentum in Cisco’s AI infrastructure offerings. The company secured over $600 million in AI-related orders during the quarter, exceeding its full-year goal of $1 billion in just nine months. Security was another bright spot, with revenue in that segment jumping 54% year over year to $2 billion.
CEO Chuck Robbins said the performance reflects “clear demand” for Cisco’s technology, adding that customers are investing in networking upgrades to support the growing bandwidth demands of generative AI initiatives.
Steady Execution Despite Tariff Concerns
Cisco’s management signaled confidence in customer spending resilience, even in the face of ongoing trade tensions and tariff-related uncertainty. “We looked at a ton of data points to see if we saw any signs of broad-based pull-ahead business, and we did not,” Robbins said on the earnings call.
This sentiment was echoed by Deutsche Bank analyst Matt Niknam, who wrote that tariffs and market volatility in April “do not appear to have negatively impacted spending plans across enterprise, public sector or service provider verticals.”
The company maintained tight control on expenses, reporting flat operating costs year over year while achieving a modest increase in gross margin to 65.6%. That operational discipline helped drive a solid jump in GAAP net income to $2.49 billion from $1.89 billion a year earlier.
Cisco also provided Q4 guidance that exceeded expectations, forecasting earnings per share of $0.96 to $0.98 on revenue of $14.5 billion to $14.7 billion. Full-year revenue is now projected between $56.5 billion and $56.7 billion — up from its prior range of $56 billion to $56.5 billion.
Positioning for the AI Era
The latest results further cement Cisco’s relevance in the rapidly evolving AI landscape. The company’s traditional strength in networking and security is proving critical as enterprises modernize infrastructure to handle AI workloads. According to outgoing CFO Scott Herren, many customers are proactively upgrading their systems to prepare for widespread AI adoption across functions like sales, marketing, and finance.
New CFO Mark Patterson, a Cisco veteran with 25 years at the company, will take over in July. Patterson said Cisco is “well-positioned” in its core markets and optimistic about its expanding role in AI. “I don’t know that I’ve ever been more optimistic about where we’re headed,” he noted.
In addition to product growth, Cisco is expanding its global partnerships. The company recently announced deals with AI-focused initiatives in the Middle East, particularly in Saudi Arabia and the UAE, to support large-scale infrastructure projects.
Investor Sentiment and Outlook
Cisco’s performance stands in contrast to broader economic unease and market choppiness. Before the Q3 report, the stock had been relatively flat for the year amid concerns over tariffs and slowing public sector demand. But Thursday’s rally, Cisco’s largest single-day gain in a year, suggests investors are warming to its AI and security growth narrative.
The company’s outlook remains solid. Analysts project an average 12.5% upside for the stock, with a high target of $80. However, some valuation models, suggest the shares may already be near their fair value, warning of potential downside.
Still, with its traditional strengths adapting well to modern demands, Cisco appears to be more than just a legacy tech name. As generative AI reshapes enterprise operations, Cisco’s networking backbone and security expertise may prove indispensable.
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