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Investing.com - Shares in Cisco Systems (NASDAQ:CSCO) jumped in premarket U.S. trading on Thursday after the company lifted its annual revenue guidance thanks in large part to artificial intelligence-fueled demand for its cloud networking gear.
The group said it now expects its fiscal 2025 sales to be between $56 billion and $56.5 billion, versus previous a prior forecast of $55.3 billion to $56.3 billion. Analysts had anticipated an outlook of $55.99 billion, according to LSEG data cited by Reuters.
Its forecast for third-quarter revenue also topped estimates. CFO Richard Scott Herren noted that the outlook has "built in" the potential costs associated with a recent 10% tariff imposed on China by the Trump administration, as well as now-delayed levies on Canada and Mexico.
Cisco has been a beneficiary of a surge in investment in data centers needed to power and train AI. Data centers use Cisco’s products like routers and ethernet switches.
"As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security," Cisco CEO Chuck Robbins said in a statement.
For the three months ended on January 25, Cisco reported second-quarter adjusted earnings per share of $0.94 on revenue of $13.99 billion. Analysts polled by Investing.com had anticipated per-share income of $0.91 and sales of $13.87 billion.
Cisco also increased its dividend by 3% to $0.41 and authorized an additional $15 billion in share buybacks, bringing the total amount of stock repurchases up to $17 billion.
"The report and guide are solid as the company continues to execute well while enjoying a cyclical improvement in demand trends," analysts at Vital Knowledge said in a note to clients.
"The key for the stock isn’t so much a huge upward revision in estimates but instead a succession of modest beat-and-raise reports that helps drive further multiple expansion."
(Yasin Ebrahim contributed reporting.)