Cisco CEO Chuck Robbins told CNBC on Thursday that the industry is headed for a “networking supercycle” due to surging demand for artificial intelligence tools and equipment.
The stock rose 13%, its best day since 2011, after Cisco significantly beat its fiscal year AI infrastructure and hyperscaler guidance orders, raising its forecast to $9 billion from $5 billion.
The California-based networking equipment maker also announced it will cut about 5% of its workforce as it shifts its focus to AI focus areas, silicon and optics.
“Given how quickly the market moves, we need to reallocate resources quickly,” Robbins told CNBC. “And by the way, a lot of the people who could be affected are actually going to get the job.”
Cisco is lagging in the AI race, led by competitors who are hyperscalers. Nvidia. But the company recently surpassed its Internet boom high as investors bet on the network infrastructure needed to run data centers and AI trading expanded.
Robbins said the “dynamic” nature of the AI market makes it difficult to lock in future booking forecasts, and the company has opted out of some projects with hyperscalers.
“We’re not completely on the fence yet, but we have a good understanding of our relationship and the design wins and their capital commitments, so we feel good about where we’re headed,” he said.
Robbins also commented on the Mythos hysteria that has swept financial markets and led to meetings at the White House with top tech leaders. He said the company is currently discussing AI models with all its customers.
Cisco is participating in Anthropic’s Project Glasswing, and last month granted access to a select group of companies to test the model and its cybersecurity implications.
Concerns about the potential risks and vulnerabilities this model exploits are forcing businesses to accelerate security upgrades.
“You have to be agile and you have to be ready to move at any time,” Robbins said.
Cisco’s daily stock price chart.
—CNBC’s Jordan Novet contributed reporting
