(Reuters) – Cisco Systems (NASDAQ:CSCO) raised annual revenue forecast on Wednesday, a sign of improving demand as the computer networking equipment maker shifts focus to cybersecurity, cloud systems and AI-driven products.
Companies have ramped up investments in AI technologies which require heavy computing power, creating a spike in demand for data centers, which use Cisco’s products such as ethernet switches and routers.
“Our customers are investing in critical infrastructure to prepare for AI, and with the breadth of our portfolio,” CEO Chuck Robbins said in a statement.
Cisco is a major supplier of networking equipment including ethernet switches, which connect devices such as computers, laptops, routers, servers and printers to a local area network.
The company had announced two rounds of layoffs this year in a bid to cut costs and focus investments in areas such as cybersecurity.
Cisco completed its $28 billion acquisition of Splunk (NASDAQ:SPLK) in March, which aims to boost its software business amid an AI boom while also helping to offset a post-pandemic slowdown in demand by enhancing its cybersecurity capabilities.
Cisco now expects annual revenue to be between $55.3 billion and $56.3 billion, compared with its earlier forecast of between $55.0 billion to $56.2 billion.
Its revenue fell 6% to $13.84 billion for the first quarter ended Oct. 26, compared with estimates of $13.77 billion.
The company reported an adjusted profit per share of 91 cents, compared with estimates of 87 cents.
Rival Arista Networks (NYSE:ANET) projected fourth-quarter revenue above Wall Street estimates earlier this month.