Cisco Shares Surge 17% to All-Time High After Beating Earnings Estimates and Raising Annual Outlook

Cisco Systems Surges to Fresh All-Time High on Strong Q3 Results and AI Orders

Shares of Cisco Systems, a software and networking giant, skyrocketed 17.2% to a new all-time high of $119.36 on Thursday, May 14, following the company's impressive third-quarter results and an upward revision of its annual revenue forecast. The surge was driven by a significant increase in orders from hyperscalers, with the company securing $5.3 billion in artificial intelligence infrastructure orders so far this fiscal year.

The company's quarterly profit and revenue exceeded analysts' expectations, with CEO Chuck Robbins stating that Cisco witnessed "very strong, broad-based demand for our products." This strong performance has lifted the stock's May gains to around 30%, while its year-to-date return has climbed sharply to 52%. The tech giant's rally also boosted the Dow Jones Industrial Average, putting the index on track to reclaim the 50,000 level it first touched earlier this year.

Cisco reported record quarterly revenue of $15.8 billion for the quarter ended April, a 12% year-over-year increase. Revenue from its networking segment stood at $8.82 billion, while net income rose to $3.37 billion from $2.49 billion a year earlier. The company generates the bulk of its revenue from its networking business and has emerged as one of the major beneficiaries of Big Tech's AI spending boom.

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Cisco has secured $5.3 billion in artificial intelligence infrastructure orders from hyperscalers so far this fiscal year and raised its full-year expectations for such orders to $9 billion, up from the earlier projection of $5 billion. Hyperscalers such as Meta Platforms, Amazon, Google, and Microsoft are collectively spending hundreds of billions of dollars to expand their artificial intelligence infrastructure.

While the company announced around 4,000 job cuts, representing less than 5% of its workforce, as part of a restructuring effort, it is the surge in AI-related orders that appears to be driving investor optimism. Robbins stated that the company is shifting investments toward areas "where demand and long-term value creation are strongest" to remain competitive.

Cisco's push toward a broader network of quantum machines is in line with similar efforts by peers such as Alphabet's Google and IBM. The company expects fourth-quarter revenue in the range of $16.7 billion to $16.9 billion, higher than the guidance range of $16.2 billion to $16.7 billion issued in February.

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