Cisco CEO: Tech Giant Anticipates $1B in AI Orders In Latest Fiscal Year

'Partners around the world are anticipating a transformative wave of AI technology demand driven by infrastructure, cyber security and customer experience, which they expect to fuel the majority of the revenue over the next four to five years. With the breadth of our portfolio, we are uniquely positioned to capitalize on this AI technology demand,' Cisco CEO Chuck Robbins said during the company’s Q1 2025 earnings call.

Cisco Systems will ride the AI wave to new growth as customers invest in critical infrastructure to prepare for AI and refresh opportunities abound, according to the company‘s executives.

In fact, the tech giant is on track to garner $1 billion in AI orders during its fiscal 2025 year, Cisco's CEO Chuck Robbins said during the company's Q1 2025 earnings call on Wednesday evening.

“Our Q1 results highlight continued strong demand for Cisco technologies, driven by the need for modern, resilient networks as AI begins to scale,” Robbins said. “Partners around the world are anticipating a transformative wave of AI technology demand driven by infrastructure, cyber security and customer experience, which they expect to fuel the majority of the revenue over the next four to five years. With the breadth of our portfolio, we are uniquely positioned to capitalize on this AI technology demand.”

Robbins said that during the first fiscal quarter, Cisco’s webscale customers placed AI infrastructure orders in excess of $300 million. Big opportunities are presenting themselves with enterprise customers too, Robbins said, adding that the company's data center switching portfolio had its third consecutive quarter of double-digit order growth as enterprises ready themselves for AI deployments.

“Our customers continue to be balanced between which workloads they move to the public cloud and which they move they build into the private infrastructure,” he said. “The majority of the [AI] buildout is way ahead of us on the enterprise side … It’s a very dynamic market, and [enterprises] have a lot of rapidly changing requirements. As we see these opportunities arise and we get we get these design wins, as we talk about, ultimately they become bookings, and then ultimately they become revenue.”

Cisco Q1 2025 Financial Results

Cisco’s networking segment includes the core switching and routing businesses, as well as the company’s telecommunications, cloud, and optical networking products. Networking, a typically strong category for Cisco, posted a 23 percent decline in revenues of $6.75 billion compared to Q1 2024’s result. This quarter, the segment was impacted primarily by the elevated level of shipment that the company saw a year ago, said Cisco CFO R. Scott Herren.

The tech giant's acquisition of unified security and observability platform developer Splunk for $28 billion, Cisco’s biggest acquisition to date, is already paying off for the company, which has been integrating Splunk technology into its security and observability segments.

To that end, Cisco’s security segment rose a whopping 100 percent year over year with revenues of $2.02 billion, which was attributed to the company's renewed security strategy and product pipeline, with offerings such as zero trust and extended detection and response (XDR), Secure Access and Multicloud Defense, Robbins said.

The observability segment continued its strong momentum, posting 36 percent revenue growth quarter over quarter of $258 million.

Excluding Splunk, the security and observability segments grew 2 percent and 1 percent, respectively, in the first quarter of fiscal 2025, according to the company. The security portfolio was impacted by delays in U.S. Federal spending, Herren said.

Cisco’s collaboration segment declined 3 percent year over year to $1.09 billion in revenue compared to Q1 2024, which the company attributed to declines in declines in on-prem Webex and collaboration devices, partially offset by growth in contact center and CPaaS offerings.

The company’s product revenues, which is often led by the networking business, declined 9 percent and service revenues increased by 6 percent during Q1 2024, said Herren.

Subscriptions now make up about 57 percent of Cisco's total revenue and grew 21 percent year over year, Robbins said.

For Cisco’s fiscal Q1 2025, which ended October 26, revenue slipped 6 percent to $13.8 billion compared to the same period a year ago. Cisco posted non-GAAP earnings per share of 91 cents, an 18 percent decrease compared to a year ago and non-GAAP net income of $3.7 billion in the first fiscal quarter of the year, which was down 19 percent year over year.

Excluding Splunk, total revenue was down 14 percent.

In the first quarter of fiscal 2025, Cisco closed two software acquisitions, including DeepFactor Inc., a privately held cloud-native application security company, and Robust Intelligence, Inc., a privately held AI security solutions company.

Cisco’s stock sank by a little more than 2 percent in after-hours trading Wednesday following the networking giant’s earnings release.