- Cisco now counts over $2B in AI infrastructure orders for fiscal year 2025
- The company is cautious about predicting AI revenue gains
- Security could be another potential avenue for Cisco growth, analyst Jack Gold told us
Cisco is going all gas, no brakes on the AI infrastructure train, raking in over $2 billion in year-to-date orders as webscale customers led the charge for demand. The question is when it will start seeing those AI dollars flow.
“I don’t feel like AI’s a fleeting trend,” said Cisco CEO Chuck Robbins on the fourth quarter earnings call. AI infrastructure orders in Q4 alone reached over $800 million, he noted, two-thirds of which came from systems while the rest were for optical.
While enterprise AI adoption is still early, Robbins said Cisco has a growing pipeline “in the hundreds of millions” in that segment. Despite the enthusiasm surrounding AI, Cisco execs refrained from predicting how much revenue will come from the $2 billion order pot.
But Robbins assured investors, “we got the backlog and we’ll have the new orders that we take down during the year.” All told, the company is targeting $59-$60 billion total revenue for fiscal year 2026.
Patrick Moorhead, chief analyst at Moor Insights & Strategy, said Cisco is smart to be “very conservative” with its AI numbers, especially since it’s too soon to tell whether some of its hyperscale partnerships will pay off.
“These hyper scaler deals are very lumpy…you don’t know until the very end if you’re going to win it,” he told Fierce.
Aside from pursuing AI growth from hyperscalers and enterprises, Cisco is also taking on more partnerships in the Middle East, a region that’s rapidly emerging into a new hub for data centers and the sovereign cloud.
The company in May signed onto the Stargate UAE consortium, joining companies like OpenAI, Oracle, Nvidia and SoftBank as a preferred technology partner. Most recently, Cisco announced it will help Saudi Arabian telco Zain KSA develop a GPU-as-a-Service offering.
The fact Cisco is chasing different avenues of AI opportunities bodes well for future revenue prospects, said J.Gold Associates Principal Jack Gold.
“Cisco has put a lot of effort into its broad pursuit of the AI market,” he said. “The huge AI build out bubble may pop at some point, but in the interim its critical to Cisco’s future revenues.”
Could Cisco see AI orders ramp in the optical segment? Perhaps, but “they also have competition here so it will be interesting to see how this market progresses for them,” Gold said. Sizable competitors in the optical market include Huawei, Ciena and now Nokia, which acquired Infinera earlier this year.
Is security another AI goldmine for Cisco?
Security on the other hand “is probably one of their premiere opportunities going forward,” he said. While networking was Cisco’s top performing product line in the quarter, increasing 12% year-on-year to $7.6 billion in revenue, security made up the second-highest revenue bucket, rising 9% to $1.9 billion.
Most of the security gains came from the Splunk business, which Cisco in 2023 acquired for $28 billion. Execs noted Cisco in Q4 added 750 new customers for its Secure Access, XDR, HyperShield and AI Defense products.
“The expansion of networks and AI compute will put more emphasis on security requirements,” Gold added. “Cisco has been saying for some time it wants to be a core security capability for clients and it seems to be taking hold.”