Cisco Raises Forecast, Cites Surge in AI Driven Networking Demand

Cisco Systems raised its full year revenue and earnings forecast on Wednesday, attributing the upgrade to accelerating demand for networking equipment that supports artificial intelligence workloads. The company now expects fiscal 2026 revenue between $60.2 billion and $61 billion, up from a prior projection of $59 billion to $60 billion. Adjusted earnings per share were raised to a range of $4.08 to $4.14, compared with the earlier $4.00 to $4.06 estimate.

The upgrade follows a wave of capital spending commitments by major cloud providers including Alphabet, Microsoft, Meta and Amazon, which have signaled plans to increase annual investment in data centers and the advanced chips that power generative AI. Cisco said it expects about $3 billion in AI infrastructure revenue from hyperscalers in fiscal 2026, a key component of the revised outlook. In the previous fiscal year the company secured more than $2 billion in AI related orders, nearly all from hyperscaler customers.

Cisco executives described a broader pipeline of opportunities beyond the large cloud operators. "We are see a growing pipeline in excess of $2 billion for our high performance networking products across sovereign, neocloud and enterprise customers," Chief Executive Chuck Robbins said. The statement suggests demand is expanding into segments focused on localized cloud services and enterprise modernization, not only the largest data center builds.

For investors and industry participants the data point of $3 billion in expected hyperscaler revenue is notable because networking gear historically represents a smaller share of total data center spending than servers or compute accelerators. AI models and modern data center architectures, however, require greater bandwidth, lower latency, and denser switching and routing capabilities. That structural shift is supporting stronger sales for vendors that can deliver high throughput interconnects and systems integration.

The implications ripple across the technology supply chain. Increased orders for networking equipment raise demand for high end chips component materials and contract manufacturing capacity. They also add urgency to policy discussions about domestic semiconductor production and data center siting, as governments consider incentives to retain critical infrastructure and to meet sovereignty requirements cited by some customers.

Longer term the move underlines a rebalancing of capital spending within the technology sector. After several years in which software and services drove much of the narrative, the AI cycle is tilting investment back toward hardware and infrastructure. For Cisco the upgraded forecast and the disclosed pipeline offer a signal that legacy hardware vendors can still capture growth as cloud architectures evolve.

Analysts will watch whether Cisco can convert its pipeline into sustained revenue growth and maintain margins as competition intensifies. For now the company is positioning itself to benefit from a wave of AI driven data center expansions that could reshape where and how enterprises and cloud providers allocate capital in the years ahead.