Cisco's Shares Surge on AI Gear Demand Amid Tariff Concerns

Cisco Systems (CSCO) has experienced a surge in shares following an increased annual revenue forecast, driven by robust demand for its cloud networking gear as companies invest heavily in artificial intelligence infrastructure.

The company projects fiscal year 2025 sales to be between $56 billion and $56.5 billion, an increase from the previous forecast of $55.3 billion to $56.3 billion. Cisco is targeting $1 billion in AI infrastructure deals by 2025, with approximately $700 million in AI infrastructure orders already reported in the first half of FY25.

Despite positive momentum, Cisco is addressing potential impacts from U.S. tariffs, with CFO Scott Herren noting that the company's adjusted gross margin forecast for the third quarter accounts for the cost of proposed tariffs. These tariffs are expected to slightly weaken the gross margin outlook for Q3.

Cisco's strategic positioning to support AI-related networking needs, along with the acquisition of Splunk, has significantly contributed to the company's recent success. Cisco's CEO, Chuck Robbins, emphasized that enterprises seek end-to-end solutions to support their AI initiatives, with AI security becoming a key priority.

Analysts have raised their price targets on Cisco's stock, with the consensus rating on TipRanks being a "Moderate Buy". The Cisco share forecast is $65.33, 4.5% above the current price level.