Cisco Systems Inc. projected $7.5 billion in sales tied to the AI data center boom this fiscal year, disappointing investors who've seen the world's largest networking gear supplier amass $9.3 billion in artificial intelligence-related orders over the past year.
AI sales will make up about 10% of Cisco's projected total revenue of $72.2 billion to $73.4 billion in fiscal 2027, according to a company statement issued on Wednesday. That marked the first time Cisco had given a full-year AI revenue forecast, and analysts questioned how it lined up with AI-related orders that totalled $4 billion alone in the quarter that ended July 25.
“That just strikes me as very, very conservative,” David Vogt, an analyst at UBS, said during a conference call with Cisco executives to discuss the company's quarterly results. The shares fell about 4% in extended trading after closing at $123.88 in New York. The stock had gained nearly 25% over the past three months on investor anticipation that its focus on AI would drive higher sales.
Cisco is facing high expectations that it will profit from the worldwide build-out of data centers powering AI systems. The company has been restructuring in an attempt to score more contracts tied to the AI boom, but it's also now in closer competition with the likes of Broadcom Inc. and Hewlett Packard Enterprise Co.
Cisco Chief Executive Officer Chuck Robbins said during the call that the company generated about $4 billion in AI revenue in fiscal 2026, even while orders totaled more than $9 billion. “These are non-linear orders that are massive in scale and are usually placed well ahead of time,” he said, describing the AI sales guidance as “a good, prudent guide for the year.”
The AI guidance overshadowed Cisco's outlook for sales and profit in the first quarter, which topped analysts' estimates. Revenue will be $18 billion to $18.2 billion in period that runs through October, compared with analysts' average projection of $16.8 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be $1.32 to $1.34 a share, also well above estimates.
Fiscal fourth-quarter sales rose 18% from a year earlier to $17.3 billion. Analysts, on average, predicted $16.8 billion. Profit, excluding some items, was $1.22 a share, compared with an average estimate of $1.17.
Despite its focus on supplying AI data centers, Cisco still depends on its traditional businesses for much of its sales. Earlier this year, the company announced a reorganisation to focus more closely on the AI market and estimated that related job cuts would result in as much as $1 billion in severance costs and other one-time expenses.
Sales from Cisco's security business totaled $2.23 billion in the fourth quarter, up 14% from a year earlier.
Cisco Chief Financial Officer Mark Patterson said he expects AI models, which are proving increasingly capable of identifying cyber vulnerabilities and exploiting them, to drive further growth. “From that perspective, that's creating a shift of dollars from other areas in the organisations to IT to actually do that work,” he said.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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