Many of Big Tech's peers seem to use AI as a justification to cut down on work, but they argue that Cisco Systems is taking a different approach. According to CEO Chuck Robbins, the company is not using artificial intelligence to cut its workforce. “I don't want to get rid of a lot of people right now,” Robbins told CNBC, adding that he hopes Cisco engineers will “innovate and become more productive.” “We hope that the engineers we have today will innovate faster and become more productive. It gives us a competitive advantage,” said Cisco CEO.This contrasts with companies like Microsoft and Amazon, which have recently fired thousands of employees. Microsoft alone cut approximately 9,000 jobs in early July. Robbins admitted that many of his peers expect to hire in the future as AI technology advances, and that he did not rule out the “future” Cisco potential.
What drives Cisco's AI strategy
Cisco's latest quarterly results suggest that its strategy is working. The company exceeded expectations for both revenue and revenue, providing a positive outlook. A key factor in this success is focusing on AI infrastructure. The company more than doubled its first $1 billion AI infrastructure order target for fiscal year 2025, receiving more than $800 million orders in the fourth quarter alone. These orders are primarily from “WebScale customers” (large tech companies such as Amazon, Meta Platforms, Microsoft, and more), and are rapidly building AI capabilities.Despite positive news, Cisco shares experienced a 1.5% DIP on Thursday. The cause was poor performance in the security segment, which missed revenue expectations. The weakness was attributed to US federal government budget cuts that affected Cisco's operations with these agencies. The company wanted to grow more than its acquisition of cybersecurity platform Splunk in March 2024, but the full advantage of that transaction is lagging behind.Still, Cisco's overall picture remains strong. The company has confirmed that it has already secured AI revenue from WebScale customers for fiscal year 2025 at around $1 billion. This is Cisco, a component of Dow Jones Industrial Average, a new addition to TheStreet's portfolio. The investment team sees the company's role in supporting its clients' AI initiatives as a key growth driver.
