Cisco Jumps on Raised Revenue Forecast Amid Tariff Concerns
Cisco Systems shares (CSCO) surged 6.4% in premarket trading on Thursday following an upward revision in the company's annual revenue forecast.
Robust demand for Cisco's cloud networking equipment drove the optimism, as enterprises accelerate investments in AI infrastructure. The company's Ethernet switches and routers for data centers have seen increased demand.
Despite macroeconomic uncertainties, Cisco cited strong cloud demand, particularly from hyperscalers and telco customers upgrading their networks for AI-driven traffic.
CFO Scott Herren acknowledged the potential impact of U.S. tariffs, indicating that the company's adjusted gross margin forecast for Q3 includes cost implications. Analysts attributed the weaker margin outlook to near-term tariff effects.
Analysts remain bullish, with at least six upgrading their price targets on CSCO. Cisco's forward P/E ratio is 16.23, while its peer Arista Networks (ANET) trades at 43.21.
Cisco shares have gained over 17% in 2024, outperforming ANET's 87% rally.