Cisco Sticks to Cautious Outlook, Despite AI Sales Pickup (Full)

Cisco CEO Chuck Robbins joins Bloomberg to discuss company earnings, US manufacturing outlook, tariff impact, and where he sees the company's AI investment in the next few years.

Cisco Systems Inc., the largest maker of machines that run computer networks and the internet, gave a cautious forecast for the current fiscal year, even as sales from artificial intelligence projects begin to pick up.

Revenue will range from $59 billion to $60 billion in the fiscal year that runs through July 2026, the company said in a statement Wednesday. That’s in line with the average Wall Street estimate of $59.5 billion, though some analysts were looking for more than $61 billion.

The guidance assumes that current tariffs remain in place through the end of 2026, Chief Financial Officer Mark Patterson said on a call with analysts. “We will continue to leverage our world-class supply-chain team to help mitigate the impact of tariffs where appropriate,” he said.

The shares fluctuated in late trading after the report was released, rising about 1% after an earlier decline. Cisco had been up 19% this year through the close.

Like many peers, Cisco is working to benefit from booming artificial intelligence spending. The company said Wednesday that it recognized about $1 billion in AI revenue in fiscal 2025. Still, the area is becoming increasingly competitive. Companies like Broadcom Inc. and Hewlett Packard Enterprise, which last month completed its acquisition of Juniper Networks, are looking to serve the same markets.

In the fiscal fourth quarter, which ended July 26, revenue rose 7.6% to $14.7 billion. Profit was 99 cents a share, excluding some items. That compares with estimates of $14.6 billion for sales and 98 cents a share for earnings, according to data compiled by Bloomberg.

Federal business should return to growth during the new fiscal year, Chief Executive Officer Chuck Robbins said on the call. Technology firms have been grappling with changes to government procurement due to the Trump administration’s cost-cutting efforts.

To spread Cisco’s bets, Robbins has bolstered the company’s security and monitoring software by acquiring Splunk Inc. for $28 billion in 2024.

For now, Cisco isn’t seeing the same surge in AI-fueled investor interest that some tech peers are, David Bahnsen, chief investment officer of the Bahnsen Group, said in an interview with Bloomberg Television. But the company has “a future growth play they’re very well positioned for,” he said.

AI infrastructure orders from large cloud providers were over $800 million in the quarter, the company said. That’s an increase from $600 million in the prior quarter.

Cisco has inked partnerships with Saudi Arabia’s AI company, Humain, and has said it will play a role in the Stargate project in the United Arab Emirates. These Middle East partnerships will ramp up in the second half of fiscal 2026, Robbins said on the call.

Cisco will be a “core system provider” for training AI software and operating it at a massive scale, he said.

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