Cisco Systems says it does not use artificial intelligence to reduce it. “I don't want to get rid of a lot of people right now,” Cisco CEO Chuck Robbins told CNBC Thursday after Jim Kramer asked about the potential savings Agent AI offers. And for engineers, Robbins added, “We just want the engineers we have today to innovate faster and become more productive. That brings a competitive advantage.” Agent AI refers to digital systems that can bring human-like problem-solving to tasks that require increasingly difficult tasks, such as overseeing customer service and writing software. Robbins' approach differs from other major tech companies that appear to be using AI technology as a gateway to reduce labor costs. The club names Microsoft and Amazon are just a few of the companies that have recently cut their employees by thousands. In early July, Microsoft alone reduced approximately 9,000 of the global workforce. “Most of my peers would suggest that if we get this right, they expect them to hire fewer people,” said Robbins, who didn't rule it out on the streets. “It's early.” Fortunately, for networking equipment providers, its latest quarterly revenue and revenue beats and slightly higher guidance indicate that management direction is not hurting the company. “Agents are destinations,” Robbins said for most customers at Cisco WebScale. The company more than doubled last year's original $1 billion AI infrastructure order target in 2025, exceeding $800 million in the fourth quarter alone. WebScale customers refer to major high-tech names such as Amazon, Meta Platforms, and Microsoft. Cisco is the club's latest stock. We started our position in mid-July and then made two more purchases on the promise of how the company can help its customers with AI. Cisco is one of the 30 stocks that make up the Dow Jones industrial average. “Historically, the way you want to review Cisco is because that's what you're making for revenue,” said Jeff Marks, director of club portfolio analysis at a monthly meeting in August. Cisco did not release AI revenue guidance for the next fiscal year. However, in a post-revenue conference call on Wednesday evening, Robbins confirmed roughly $1 billion in AI revenue from WebScale customers in 2025. The security segment was the wound that frowned investors and contributed to the 1.5% decline in stock on Thursday. Cisco signed a $28 billion deal in March 2024 to purchase the Splunk cybersecurity platform. Splunk's profits were pushed out as the division saw some growth but missed revenue. Cisco believes this weakness stems from US federal government operations, which are affected by budget cuts. Excluding federal operations, the majority of Cisco security businesses have increased by double digits. Marks said the club would “buy” more Cisco stocks if the shares fall about $69 more than current trading levels. The stock hit a 52-week high of $72.55 on Monday.
