By Anzar Mehraj
Nov 12 (Reuters) – Cisco beat Wall Street estimates for first-quarter results and raised its annual revenue forecast on Thursday, as the network-gear maker bets on sustained strong demand from companies building out their AI infrastructure.
The company has doubled down on its AI efforts through strategic investments as Big Tech’s massive spending moves beyond AI processors to the switches and routers required to connect large data-center systems.
Cisco expects fiscal 2027 revenue in the range of $74.8 billion to $75.8 billion, compared with its previous forecast of $72.2 billion to $73.4 billion.
“We are in the very early stages of a multi-year networking supercycle,” CEO Chuck Robbins said in a statement.
The company raised its fiscal 2027 forecast for AI infrastructure revenue from hyperscalers to $9 billion from $7.5 billion. The segment generated revenue of $4 billion a year earlier.
Investors have been worried about a possible slowdown in data-center buildout following Democrats’ sweeping win in the US midterms, as well as rising borrowing costs and their impact on the debt-fueled construction.
Cisco reported first-quarter revenue of $18.5 billion, compared with analysts’ average estimate of $18.14 billion, according to data compiled by LSEG.
The company reported an adjusted profit of $1.40 per share for the quarter ended October 24, above estimates of $1.33.
Cisco is also building software tools that businesses can use to build their own armies of bots, known as AI agents, to protect their IT infrastructure against cybersecurity threats.
Shares of the San Jose, California-based company were flat in volatile extended trading. They have risen about 32% so far this year through Thursday’s close.
Cisco’s gross margin has been a worry for investors, as a shortage of memory chips has pushed up component costs for hardware makers while suppliers prioritize chips for AI data-center customers.
“A small dip in gross margin is not a major concern given higher memory and component costs,” said Bob O’Donnell, president and chief analyst at TECHnalysis Research.
Cisco’s raised annual forecast and results above estimates are what the market wants to see from a company tied to AI infrastructure, he added.
The company reported first-quarter adjusted gross margin of 65.6%, in line with estimates, but down from 68.1% a year earlier.
(Reporting by Anzar Mehraj in Bengaluru; Editing by Sriraj Kalluvila)
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