Cisco: Trade Concerns Dampen Growth, but AI Infrastructure Opportunity Remains
DAVOS, SWITZERLAND - Improving US-China relations would benefit global businesses, according to Cisco CEO Chuck Robbins. Robbins expressed optimism about the Trump administration's efforts to address issues between the two countries.
Cisco entered the Chinese market in 1994 and has faced intensified competition in recent years. Product revenue in China declined by 35% in fiscal 2024.
Despite these challenges, Cisco's stock has rebounded in recent months, outperforming the S&P 500. The company has benefited from strong demand for its AI infrastructure products and the integration of its Splunk acquisition.
Cisco reported 9% order growth in its first fiscal quarter and expressed optimism about the future. Networking sales, a key driver of Cisco's stock performance, have rebounded, offering hope for continued growth.
Analysts remain optimistic about Cisco's near-term prospects, citing earnings upgrades from recovering enterprise networking demand. Cisco expects to generate an additional $1 billion in AI orders in the current fiscal year.
While Cisco's China business has faced challenges, the company remains committed to ensuring the extension of expiring tax cuts for businesses and households. Robbins believes these cuts are essential to mitigate the potential impact of tax increases for American citizens.