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Cisco (CSCO) pops on AI demand

Cisco Skyrocketing demand for AI tools and equipment is powering the industry toward a “networking supercycle,” CEO Chuck Robbins told CNBC on Thursday.

Shares rose 14 percent, heading for their best day in more than two decades, after Cisco beat its AI infrastructure and hyperscaler guidance for the fiscal year and raised its forecast to $9 billion from $5 billion.

The California-based networking equipment manufacturer also said: approximately 5% cut It is shifting its focus to AI-focused segments, silicon and optics, resulting in a workforce reduction.

“Given the speed at which the market moves, we need to reallocate resources quickly,” Robbins told CNBC. “In the meantime, many of the people potentially affected will actually get these jobs.”

Cisco lags behind hyperscaler peers in AI race led by Nvidia. But the company has recently surpassed its online ascent as investors invest in the network infrastructure needed to run data centers and its AI business expands.

The “dynamic” nature of the AI market makes it difficult to focus on forward booking forecasts, and the company has abandoned some projects with hyperscalers, Robbins said.

“We don’t have full visibility yet, but we understand enough about our relationship, what the design wins and what their capital commitments are, and we feel good about where we’re going,” he said.

Robbins also commented on the Mythos hysteria that has swept financial markets and led to a White House meeting with top tech leaders. He said the company is now discussing the AI model with every customer.

Cisco is part of Anthropic’s Project Glasswing, which last month gained access to a select group of businesses to test the model and its cybersecurity implications.

Concerns about potential risks and vulnerabilities exploited by the model have forced businesses to accelerate security upgrades.

“You have to be nimble and ready to move,” Robbins said.