Cisco Gains After AI-Fueled Networking Spending Lifts Forecast

Cisco Systems (CSCO) shares surged in extended trading on Wednesday after the networking hardware maker reported fiscal second-quarter results and guidance that topped Wall Street's expectations. The company's strong performance, driven by increased demand for AI infrastructure, has analysts bullish on the stock's prospects.

Cisco reported earnings per share of 94 cents adjusted, surpassing the expected 91 cents, and revenue of $13.99 billion, beating the expected $13.87 billion. Revenue increased 9% in the quarter, following four quarters of revenue declines. The company attributed this growth to strong product orders, including those boosted by the Splunk acquisition, which contributed positively to profitability.



Cisco's AI-driven networking solutions, such as AI-powered network management and AIOps, have contributed to the company's recent growth. These solutions use machine learning and reasoning to simplify and streamline IT operations, helping customers analyze complex issues in their deployments and identify failures across any network for quick remediation. Cisco generated around $350 million in AI infrastructure orders in the second quarter of fiscal 2025, indicating a strong growth in demand for AI-driven networking solutions.



The increased demand for AI infrastructure has significantly impacted Cisco's revenue and earnings projections. In the second fiscal quarter of 2025, Cisco reported AI infrastructure orders of more than $350 million, bringing the total for the first half of the fiscal year to approximately $700 million. This is a substantial increase from the previous year and indicates a strong growth in demand for AI infrastructure. Additionally, Cisco is on track to surpass $1 billion of AI infrastructure orders in 2025, which is a significant milestone for the company. This increased demand for AI infrastructure has also contributed to the company's overall revenue growth, with Cisco reporting a 9% increase in revenue for the second fiscal quarter of 2025.

Cisco's strategic acquisitions and partnerships have also strengthened its position in the AI networking market. The acquisition of Deeper Insights AI Ltd., a privately held AI services company, in the first quarter of fiscal 2025 has bolstered Cisco's AI capabilities and positioned it towards future growth. Additionally, Cisco announced a strategic partnership with NVIDIA, a powerful combination of two industry leaders delivering advanced AI infrastructure solutions to accelerate customers' AI initiatives. This partnership is expected to provide a broad ecosystem of partners to empower customers in the AI networking space.

Cisco's acquisition of Splunk, a leading provider of AI-powered security architecture, has also been a significant move. The acquisition was completed in March 2024 and has brought substantial benefits, particularly in boosting Cisco's cybersecurity portfolio with advanced threat detection capabilities. This acquisition marks a significant step in aligning with market needs, as cyber threats become more sophisticated.

Cisco's strong performance and strategic initiatives have analysts bullish on the stock's prospects. The average analyst rating for Cisco Systems stock from 18 stock analysts is "Buy," with a price target of $60.82, predicting a decrease of -2.73% from the current stock price of $62.53. The company's increased demand for AI infrastructure and strategic acquisitions have positioned it well for future growth in the AI networking market.