Cisco issues a strong forecast!
Feb 12 (Reuters) Cisco Systems (CSCO.O) raised its annual revenue forecast on Wednesday as the AI boom pushed demand for cloud networking gear to new heights. This positive outlook created a stir in the market and the company’s shares recorded a massive rise of about 7%. Experts believe that this strategy of Cisco will further strengthen its hold in the tech industry. The company is also preparing to make big bets on new technology innovation in the coming time.
AI boom benefits Cisco greatly!
Growing investments in AI technology have pushed the demand for data centers to new heights, further increasing the need for Cisco’s networking products. Companies are using Cisco’s Ethernet switches and routers extensively to upgrade their infrastructure. Michael Ashley Shulman, chief investment officer of Running Point Capital, believes that “Cisco’s strong forecast will not only boost its shares but will also strengthen the AI and tech industry.”
Cisco’s Big Bet: New Innovation in AI Technology and Security!
Cisco this week partnered with French AI firm Mistral to launch a new AI agent that will increase system automation and make workflows more efficient. In addition, Cisco introduced AI Defense in January, which is designed to prevent the misuse of AI tools, helping protect enterprises from cyber threats.
According to Michael Ashley Schulman, CIO of Running Point Capital, business customers are increasingly giving their networks AI-supported upgrades. This shift is offsetting a decline in government spending and strengthening the technology sector. Even if some of Washington’s projects are facing delays, Cisco’s strategy could help the company reach new heights.
Cisco’s Big Move: $15 Billion Share Buyback and Raised Revenue Estimates
Cisco approved a $15 billion increase in its share buyback program, bringing the total repurchase amount to $17 billion. The move is a big signal to investors that the company is committed to delivering more benefits to its shareholders. In addition, the company is making aggressive investments to strengthen its position in AI and cloud networking.
The company expects its revenue to reach $56-$56.5 billion** in fiscal 2025, up from the previously estimated $55.3-$56.3 billion. Analysts had estimated $55.99 billion, according to data compiled by LSEG. For the third quarter, Cisco has forecast revenue of $13.9-$14.1 billion, up from analysts’ $13.87 billion. Experts believe that the growing demand for AI can further accelerate Cisco’s future growth.
Cisco’s gross margin forecast and the impact of US tariffs
Cisco’s Chief Financial Officer Scott Herren** revealed in a conference call that the adjusted gross margin forecast for the quarter takes into account the potential cost of US tariffs. The company is working on a strategy to keep its operating margin stable, so as to balance the impact of global trade policies.
US President Donald Trump had announced a 25% tariff on most goods imported from Canada and Mexico on February 1, but it was postponed for a month to negotiate with both countries. However, **an additional 10% tariff on products imported from China has come into effect from *February 4*, which is likely to impact the cost structure of many tech companies including Cisco.
Cisco’s strong second quarter performance
Cisco reported $14 billion in revenue in the second quarter, beating market expectations. Analysts had estimated $13.87 billion, but the company surpassed this and posted better financial results. This strong performance was possible due to the growing demand for AI and cloud networking gear, which strengthened Cisco’s business.
