Cisco (CSCO) makes the AI thunder.
On Tuesday, at its annual Partner Summit in Los Angeles, Cisco unveiled a new high-density GPU server aimed at customers wanting to train large language models. It also unveiled “AI PODS,” a product designed for customers who are passionate about inference, the process that artificial intelligence models use to draw conclusions from new data.
Cisco said both products are designed to handle AI-intensive workloads powered by Nvidia (NVDA) accelerated calculation.
“This is really an important event for us, and we took the opportunity here to launch what is truly a thunderbolt of announcements around AI infrastructure,” said the president and CEO of Cisco. Chuck Robbins told Yahoo Finance.
Robbins aims to keep the momentum going with Cisco’s foray into AI.
The company shipped $1 billion in orders to five of the top six hyperscalers. He expects another $1 billion in the current fiscal year.
“I think 2025 will be the year of enterprise apps,” Robbins added. “I think we’ve seen this focus on the training models that are out there, ChatGPT and Anthropic, and you have all these models that people are using. And I think now companies are really understanding what the use cases are that we can use.
The decline in AI products comes as Cisco shares have begun to recover after being largely dead money over the past year amid several tough quarters.
Shares of the networking giant have risen nearly 20% over the past three months, outperforming those of the S&P 500 (^GSPC) 7% ahead. Rival company Hewlett Packard (HPE) the stock is down 3% in recent months.
Cisco stock has consistently underperformed, gaining just 9% over the past year, compared to a 40% improvement for the S&P 500.
The stock’s recent resurgence stems from better-than-expected fiscal fourth-quarter results in mid-August. Cisco surprised some by posting product order growth of 14% and being optimistic about integrating its Purchase of Splunk for $28 billion.
The Street is also increasingly convinced that Cisco will play a key role in building the world’s AI infrastructure, as it helped lay the structural pipes as the Internet took off in the 1990s and early from the 2000s.
Network sales, a key driver of sentiment on Cisco shares, rebounded during the quarter, raising hopes of further gains over the next 12 months.
“We believe there is a lot of upside potential in the current guidance and, importantly, there are multiple upside levers in FY25 in terms of revenues and margins,” wrote analyst Amit Daryanani from Evercore ISI, in a note to clients. Daryanani says successful Splunk integration and continued improvement in networking demand are key to his outperform rating on Cisco stock.