Cisco Surges After CEO Points to Headway in AI and Security By CIOTechOutlook Team

Cisco Surges After CEO Points to Headway in AI and Security

CIOTechOutlook Team | Friday, 18 August 2023, 04:37 IST

After outlining advancements in AI and security technologies, Cisco Systems Inc., the largest manufacturer of computer networking equipment, saw its stock rise to its highest level in six months, allaying concerns about a downturn in sales.

Cisco, which released its fiscal fourth-quarter earnings on Wednesday, is emerging from a surge in demand brought on by the closure of supply bottlenecks during the epidemic. Chief Executive Officer Chuck Robbins predicted a bright future where revenue is more predictable—thanks to subscription-based services—and Cisco takes advantage of the shift to AI-focused data centers, even though growth is currently sharply slowing from last year's surge.

The business said that orders for its AI solutions, which it sells to so-called hyperscaler clients, or significant cloud service providers, have already reached $500 million.

“Cisco is committed to helping our customers navigate this transition in a trusted and responsible way to deliver on the full promise of this technology, and we are well positioned to win,” Robbins said on a conference call with analysts.

This expectation helped the stock recover from a loss when the quarterly report was announced to rise as much as 5.4% in New York, the largest since February. The business has declared its intention to keep raising dividends and share repurchases. In regular trading, Cisco shares ended at $52.96 and are now up 11% for the year.

Sales are expected to increase to roughly $14.6 billion in the quarter ending in October. That is in line with the $14.57 billion expert prediction. Profit will be approximately $1.03 per share once certain factors are excluded, vs an average forecast of 99 cents.

A plus for Cisco has been its gross margin. The company predicted that it would be between 65% and 66% this quarter on an adjusted basis. 64.7% was the analyst estimate.