(Bloomberg) — Cisco Systems Inc., the largest seller of networking gear, gave an upbeat sales forecast for the current quarter, helped by companies spending more on computing infrastructure to take advantage of AI technology.
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Revenue in the quarter ending in April will be $13.9 billion to $14.1 billion, Cisco said in a statement Wednesday. Analysts had predicted a figure at the bottom end of that range.
The company also raised its fiscal 2025 target by about $1 billion to just more than $56 billion, compared with a $55.97 billion average estimate. That helped send the shares up about 6% in late trading.
Corporate clients have been bolstering their networking systems to help speed the creation and use of artificial intelligence. The outlook suggests that spending by those customers is helping make up for weaker orders from the federal government, which has put many projects on hold after the change of administration in Washington.
“As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements and adopt best-in-class AI security,” Chief Executive Officer Chuck Robbins said in the statement.
The shares had increased 5.5% this year heading into the earnings report.
Cisco’s switches and routers are the key pieces of equipment that direct data traffic in and out of networks and around the internet. The company has also pushed further into software and services, a shift accelerated by last year’s acquisition of the data-crunching business Splunk.
Cisco’s product orders rose 29% from a year ago in the fiscal second quarter, which ended Jan. 25. Minus the contribution from Splunk, new orders were up 11%, the company said.
Sales rose 9% to $14 billion in the period, just above the average estimate of $13.9 billion. The revenue expansion in the second quarter was the company’s first in a year.
Second-quarter profit climbed to 94 cents a share, minus some items. Wall Street projected 91 cents.
Under Robbins, Cisco has been trying to become less reliant on one-time sales of big-ticket equipment. That company has made headway on that front. Products such as security and remote management tools, which are hosted in the cloud, have helped add billions of dollars in recurring revenue.
Deferred revenue — a sign of future sales — now totals $27.8 billion, the company said. That’s up 8% from a year ago.
