Cisco's stock pops 14% as surge in AI infrastructure orders leads to increased guidance

Cisco Systems experienced a significant 14% increase in its stock price during after-hours trading on Wednesday, following the release of quarterly results that exceeded Wall Street expectations. The networking giant reported plans to reduce its workforce by fewer than 4,000 positions, which accounts for less than 5% of its total employees. For the quarter ending April 25, Cisco reported a 12% rise in revenue, reaching $14.15 billion compared to the same period last year. Net income also saw a substantial increase, climbing to $3.37 billion, or 85 cents per share, up from $2.49 billion, or 62 cents per share, the previous year. Looking ahead, Cisco projected adjusted earnings per share of $1.16 to $1.18, with anticipated revenue between $16.7 billion and $16.9 billion for the fiscal fourth quarter. Analysts had predicted adjusted earnings of $1.07 per share on $15.82 billion in revenue. The company highlighted a robust demand for artificial intelligence infrastructure, receiving $5.3 billion in orders from hyperscalers and raising its forecast for total orders in this sector to $9 billion, an increase from the earlier estimate of $5 billion. Revenue expectations for AI-related services have also been upgraded to $4 billion from a previous $3 billion projection. Despite being behind some competitors in the AI space, Cisco's recent performance has attracted investor interest, propelling its stock to a record high late last year and pushing its year-to-date gains to 33%, significantly outpacing the Nasdaq's growth of 14%. CEO Chuck Robbins announced that job cuts would commence on May 14, emphasizing the necessity for strategic decisions in investment and cost management to thrive in the evolving AI landscape. During the quarter, Cisco introduced new switches and routers powered by its cutting-edge processor. Additionally, the company launched a ranking system for generative AI models based on their resilience against cybersecurity threats. Networking revenue surged 25% to $8.82 billion, surpassing analyst expectations, while security revenue remained steady at approximately $2 billion, just above the anticipated $1.99 billion. A conference call for analysts to discuss the financial results is scheduled to begin at 4:30 p.m. ET.