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(Bloomberg) -- Cisco Systems Inc. gained after the company gave an upbeat sales forecast for the current quarter, helped by companies spending more on computing infrastructure to take advantage of AI technology.
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Revenue in the quarter ending in April will be $13.9 billion to $14.1 billion, Cisco said in a statement Wednesday. Analysts had predicted a figure at the bottom end of that range.
The company — the largest seller of networking gear — also raised its fiscal 2025 target by about $1 billion to just more than $56 billion. That compared with a $55.97 billion average estimate.
Corporate clients have been bolstering their networking systems to help speed the creation and use of artificial intelligence. The outlook suggests that spending by those customers is helping make up for weaker orders from the federal government, which had put some projects on hold after the change of administration in Washington.
“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,” Chief Executive Officer Chuck Robbins said in the statement.
Cisco shares climbed as much as 6.4% after markets opened in New York on Thursday, their biggest same-day gain in six months.
Cisco’s switches and routers are the key pieces of equipment that direct data traffic in and out of networks and around the internet. The company has also pushed further into software and services, a shift accelerated by last year’s acquisition of the data-crunching business Splunk.
Product orders rose 29% from a year ago in the fiscal second quarter, which ended Jan. 25. Minus the contribution from Splunk, new orders were up 11%, the company said.
In a separate filing, Cisco said that Gary Steele, president of the company’s go-to-market division, is leaving. The executive, who previously ran Splunk, is taking a CEO job at an unidentified business.
Government Slowdown
Though public sector demand isn’t at levels that Cisco has previously experienced, the weakness is mainly confined to a slice of that market. Cisco gets the majority of its US government business from the Department of Defense and only about 25% from other agencies. It’s those civilian divisions of the government that are ordering less, Chief Financial Officer Scott Herren said in an interview.