NEW YORK — Cisco Systems shares climbed in premarket trading following news of substantial new artificial intelligence infrastructure orders. The networking giant's gains contributed to an uptick in Dow Jones Industrial Average futures, which were up to 49,693 ahead of the market open.
The contracts highlight strong demand for high-speed networking equipment critical for building and expanding AI data centers. Cisco, a key provider of switches, routers and security solutions, stands to benefit directly from the ongoing buildout of AI compute capacity. The orders validate continued enterprise investment in scalable networks supporting demanding AI workloads and massive data transfers between GPUs.
AI infrastructure requires significant upgrades in data center connectivity, moving beyond traditional ethernet to faster solutions like InfiniBand or advanced ethernet fabrics. Data throughput requirements for training large language models and running AI inference engines are exponentially higher than conventional enterprise applications. Cisco's portfolio, including its Nexus and Catalyst series, positions the company to capture a substantial portion of this hardware refresh cycle.
Beyond hardware, Cisco's software and services offerings, including AI-driven security and observability tools, are seeing increased adoption, providing recurring revenue streams and an integrated AI infrastructure stack.
This spending complements strong demand seen by chipmakers like Nvidia, whose stock trades at $225.83, and cloud infrastructure providers like Amazon, trading at $270.13. Analysts expect continued growth in network infrastructure as AI adoption expands across industries from healthcare to finance.
Investment banks have maintained positive ratings on Cisco, citing its strong balance sheet and expanding recurring revenue streams. The company is set to report its next earnings in Aug. with investors watching for updates on its AI-related backlog and guidance for the remainder of the fiscal year.
