Cisco CEO: Trump-China Cooperation Crucial for Global Economy
At the World Economic Forum in Davos, Cisco CEO Chuck Robbins highlighted the significance of improved relations between the United States and China for the global business community.
"Coexistence between the US and China is essential for a thriving global economy," Robbins said. "While challenges remain, I'm optimistic about the Trump administration's outreach efforts."
Cisco's China Presence and Concerns
Cisco established its presence in China in 1994, employing approximately 4,000 people across 16 cities. However, fierce competition has led to a 35% decline in product revenue in China for fiscal year 2024.
Robbins emphasized the importance of extending Trump's tax cuts for businesses and households, highlighting the potential impact of trillion-dollar tax increases for American citizens.
Cisco's Stock Performance
Despite concerns over US-China trade tensions, Cisco's stock has gained nearly 9% in recent months, outperforming the S&P 500. Rival Hewlett Packard Enterprise (HPE) has seen a 26% surge during the same period.
Cisco's stock has underperformed over the past year, although first-quarter results surpassed expectations, with order growth of 9% and positive outlook for the integration of Splunk.
AI Infrastructure Opportunities
Analysts anticipate Cisco's role in building out the world's AI infrastructure, as it did with the internet in the past. Networking sales, a key driver of stock sentiment, rebounded in the recent quarter.
JPMorgan analyst Samik Chatterjee believes Cisco's stock will benefit from recovery in enterprise networking demand. Chatterjee rates Cisco shares as Outperform.