AI computing power demand continues to surge! Cisco Systems, Inc. (CSCO.US) "springing back to life" performance outlook exceeds expectations.

One of the world's largest computer network and internet equipment manufacturers, Cisco Systems, Inc. (CSCO.US), has provided strong performance guidance for this quarter, showing that this global technology giant is benefiting from the increasing demand for network hardware systems brought about by breakthrough artificial intelligence technology. Since the second half of 2024, as enterprise AI infrastructure spending continues to rise and strong demand for data center networking equipment from its collaboration with NVIDIA Corporation (NVDA.US) grows, Cisco Systems, Inc. is experiencing a resurgence in performance and stock price expansion. The stock price has surged over 30% since the second half of 2024, reaching a new all-time high in February this year, surpassing previous highs during the dot-com bubble period. As a pioneer of the internet age, Cisco Systems, Inc. has struggled in terms of stock price and performance over the past two decades since the burst of the dot-com bubble in 2000. However, with the unprecedented deployment and investment in artificial intelligence by global companies and government agencies following ChatGPT, Cisco Systems, Inc.'s performance has expanded significantly due to strong demand for high-performance networking equipment in data centers. Investment institutions are starting to favor this computer equipment and professional internet service provider that has been shunned by the market for nearly two decades. Overall, Cisco Systems, Inc.'s performance is benefiting from the growth in hardware infrastructure demand related to AI, especially the surge in demand for data center high-performance networking equipment (switches, routers, security interconnection solutions). The AI wave continues to drive the demand for basic hardware, as the company announced its latest performance report on Wednesday local time. The performance guidance outlook shows that management expects sales for the quarter ending in July to reach between $14.5 billion and $14.7 billion, exceeding the average Wall Street analysts' expectations of $14.5 billion; excluding certain items, Cisco Systems, Inc. management expects earnings per share to reach a maximum of $0.98 (forecast range $0.96 to $0.98), while Wall Street analysts' average forecast is $0.95. For the third quarter of the 2025 fiscal year ending on April 26, Cisco Systems, Inc. saw a year-over-year revenue growth of 11% to $14.1 billion, in line with the average Wall Street expectations. Excluding certain items, earnings per share rose to $0.96, higher than Wall Street analysts' average forecast of $0.92 and last year's $0.88 for the same period. Cisco Systems, Inc.'s performance report also shows that product orders increased by 20% year over year; even after excluding the contribution from Splunk, new orders still grew by 9%. In the third quarter, orders for AI infrastructure hardware from large-scale network customers exceeded $600 million, surpassing the $1 billion target set by Cisco Systems, Inc. management one quarter ahead. The company also stated that its performance guidance outlook already considers the impact of "current trade policies under the Trump administration." These tariffs and broader economic uncertainties have previously weighed on the prospects of other technology companies. During the performance conference call, Cisco Systems, Inc. CEO Chuck Robbins emphasized that they have not seen significant changes in customer purchasing patterns yet, and they expect AI spending to continue despite economic and tariff uncertainties. This also indicates that the AI transformation plan is crucial, and the Trump tariff policy has not stopped customers from actively deploying AI computing infrastructure. In the era of the AI wave, the internet age pioneer Cisco Systems, Inc. is experiencing a resurgence. As large technology companies and mega-cloud computing service providers continue to expand their AI computing infrastructure to meet the increasing demand for AI computing brought about by applications like ChatGPT, Claude, and DeepSeek, Cisco Systems, Inc., as a core supplier of AI computing infrastructure, is benefiting from continuous growth in performance. Under the leadership of CEO Chuck Robbins, Cisco Systems, Inc. is also actively expanding cloud network defense businesses such as network security and remote security management tools, helping the company increase recurring revenue by billions of dollars. "Our momentum in the field of artificial intelligence is driven by the strength of our network security products and high-performance network equipment, trusted global partnerships, and the real value we bring to our customers," Robbins stated in the performance declaration. After the news was released, Cisco Systems, Inc.'s stock price rose over 2% in after-hours trading on the US stock market. Prior to the release of the latest third-quarter financial report and performance guidance outlook, the stock had already accumulated a 3.5% increase since the beginning of the year, even slightly outperforming the S&P 500 index. High-performance switches and routers supplied by Cisco Systems, Inc. are core devices for computer networks and internet data transmission. The company is also aggressively promoting its software products and SaaS subscription services business, a transformation that has been accelerated by its acquisition of the big data analytics company Splunk last year. Artificial intelligence has undoubtedly helped Cisco Systems, Inc. regain its growth trajectory. Since 2024, Cisco Systems, Inc. has seen a simultaneous increase in stock price and performance, largely due to its leading advantage in high-performance data center networking equipment - mainly including high-performance network components and professional interconnection solutions for data centers - and its comprehensive collaboration with the "AI chip leader" NVIDIA Corporation.The AI boom is also driving Cisco Systems, Inc. to directly benefit from the strong hardware demand brought about by the global trend of large-scale new construction of data centers, as well as the hardware upgrade demand brought about by expansion.With the popularity of large-scale AI training and inference, the demand for high-speed, low-latency network devices in data centers is rapidly increasing. AI workloads (such as large model training, real-time inference, etc.) require massive amounts of data to be transferred quickly between large numbers of AI GPUs, ASICs, or other accelerators, thus increasing the performance requirements for data center switches, routers, interconnect systems, etc. As a leading global supplier of high-performance networking equipment for data centers for many years, Cisco Systems, Inc. has a significant competitive advantage in the field of network equipment (including high-density switches, routers, and dedicated interconnect solutions), and can directly benefit from this increased demand for hardware upgrades. Since 2024, Cisco Systems, Inc. has been closely collaborating with NVIDIA Corporation to optimize data center interconnection and develop integrated solutions for data center networking: leveraging NVIDIA Corporation's industry-leading AI GPU acceleration technology, the two companies are committed to providing high-performance network infrastructure that better supports AI training and inference; they continue to explore closer integration of NVIDIA Corporation's hardware with Cisco Systems, Inc.'s high-performance network infrastructure, to provide customers with integrated data center solutions that not only deliver powerful computing capabilities but also ensure efficient and stable data transfer. The management of Cisco Systems, Inc. is confident in the company's future revenue growth, despite the higher baseline for future performance, the company believes that there is still sufficient growth momentum driven by product refresh cycles in high-performance network hardware, network security, etc., especially the demand for large-scale procurement and upgrades of enterprise network equipment in the field of AI infrastructure, as well as the enhancement of security features related to AI, which will further support the continuous growth of orders. In addition, the company's deepening cooperation with NVIDIA Corporation will further expand the enterprise AI market, which is of strategic significance for the company's medium to long-term revenue growth and market competitiveness. In addition, the company announced executive changes: Chief Financial Officer Scott Herren will step down on July 26 and has already submitted notice to the company. Mark Patterson, 55, who has been an executive at Cisco Systems, Inc. since 2000, will take over as CFO. The company also appointed 53-year-old Jeetu Patel as President and Chief Product Officer, effective immediately; this 53-year-old employee previously served as Executive Vice President and Chief Product Officer. Global companies continue to deploy AI computing infrastructure despite tariff challenges Cisco Systems, Inc.'s latest performance outlook indicates that despite large data center operators such as Microsoft Corporation cutting back or delaying some AI data center construction projects, and some businesses deferring spending due to macroeconomic and tariff uncertainty, investments closely related to AI computing will continue, which is why core suppliers such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Anfeno, Hon Hai, etc. in the AI computing industry chain have reiterated strong performance guidance even under the threat of tariffs from Trump. This shows that tariff policies have not cooled demand for AI computing to any significant degree. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, known as the "king of chip manufacturing," has recently reported a sharp increase in demand for AI computing, with net profits soaring by 60%. Importantly, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has maintained its revenue growth expectations for 2025, with growth expected to reach around 25% this year, consistent with the goals set in January, with AI-related revenue expected to double. During the earnings conference call, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's management still expects a compound annual revenue growth rate target of around 20% over the next five years (2024-2029), with AI-related revenue expected to grow by around 45%, consistent with the strong expectations given during the previous earnings conference, indicating that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has not seen any cooling of demand caused by Trump's aggressive global tariff policies. "We haven't seen any customers really slowing down fundamentally in their AI infrastructure build-out," Robbins said during the earnings conference call with analysts. "The AI transformation is critical, and they will continue to invest until they are possibly forced to stop." It is worth noting that the company also provided details on its collaboration with Saudi Arabia's Humain company, announced on Tuesday. Humain is a company aimed at promoting AI development in Saudi Arabia.The company is funded by the Saudi sovereign wealth fund. Robbins said that they are discussing a solution in which Cisco Systems, Inc. will mainly provide high-performance network equipment, AI computing capabilities, security, and other services.Robbins explained that Humain's overall investment "could reach tens of billions of dollars", and its future scale may rival that of major network service providers in the United States. According to analysts from Wedbush, partnerships between companies such as NVIDIA Corporation, Amazon.com, Inc., AMD, and Cisco Systems, Inc. with Humain are seen as a "huge opportunity" to expand the potential market for all artificial intelligence products. "The theme is clear...the artificial intelligence revolution is about to sweep the Kingdom of Saudi Arabia, and Riyadh will become a major buyer of artificial intelligence chips, software, autonomous/Siasun Robot&Automation, and data center networking components in the next decade." While other major US tech companies like AMD and Amazon.com, Inc. have disclosed the amount of their collaborations with Humain, Cisco Systems, Inc. has not provided a figure. Herren mentioned in an interview that the partnership is still in its "early stages."