- Cisco blew past its $1 billion sales goal for AI infrastructure
- Huge appetites from three of its webscale customers helped it double AI infrastructure sales quarter over quarter
- A new partnership with Saudi Arabia comes with huge potential for the company as well
Cisco is suddenly cleaning up in the AI infrastructure market, doubling orders in the segment quarter over quarter to $600 million in its fiscal third quarter alone. The figure brings its fiscal year-to-date sales total to a whopping $1.35 billion.
Cisco has working to grow AI infrastructure sales to webscale customers across networking, silicon and optical, looking to ride the AI wave. It previously set a goal to hit $1 billion in sales in its fiscal 2025. That means it is well ahead of its goal, with its Q4 still in progress.
According to executives on the company’s earnings call Wednesday, two-thirds of orders in the $600 million pot were systems as opposed to optics and optical.
Looking ahead, CEO Chuck Robbins noted that sales in this sector aren’t linear, pointing to the wild jump from $350 million in sales its fiscal Q2 to $600 million in the recent quarter. He said demand is fairly balanced across its hyperscale customers.
“When I look at these customers, we’re seeing acceleration across all of them,” he said. “In this case, we had three that were just super high growers, next quarter it may be a different three. We’ll see.”
Executives on the call said it'll take some time for the orders to translate into revenue, but all the puzzle pieces are in place.
Robbins said these customers “would take more” if Cisco is able to supply it and pointed to execution and capacity growth as key for continued growth in this area.
“We have to execute, because if we miss with these customers we sit on the sidelines for a while,” he said.
But there are more avenues to AI growth than just hyperscalers.
Just ahead of earnings, Cisco announced a partnership with Saudi Arabia’s HUMAIN initiative, which aims to help the country build out its AI infrastructure and ecosystem.
“I think they’re going to spend a lot of money and I think they’re going to spend it as quickly as they can. It’s hundreds of billions of dollars at the end of the day,” Robbins said, adding “they’ll be as big as any of the major webscalers in the United States, is how I would think about it.”
Metrics to know
- Consolidated revenue of $14.1 billion was up 11% year on year.
- Product revenue of $10.4 billion was up from $9 billion year on year, while Services revenue of $3.8 billion increased slightly from $3.7 billion.
- The Americas continue to make up the majority ($8.4 billion) of revenue, followed by EMEA and APJC.
- Net income of $2.5 billion was up 32% year on year.