Cisco (CSCO) is breaking out the AI thunder.
On Tuesday at its annual Partner Summit conference in Los Angeles, Cisco unveiled a new high-density GPU server for customers who want to train large language models. It also took the wraps off “AI PODS,” a product designed for clients keen on inferencing, the process artificial intelligence models use to derive conclusions from new data.
Cisco said both products are built to handle intensive AI workloads powered by Nvidia’s (NVDA) accelerated computing.
“It’s really an important event for us, and we’ve taken the opportunity here to start what is really a rolling thunder of announcements around AI infrastructure,” Cisco chairman and CEO Chuck Robbins told Yahoo Finance.
Robbins is aiming to keep the momentum going with Cisco’s foray into AI.
The company has shipped $1 billion of orders to five of the six top hyperscalers. It expects another $1 billion in its current fiscal year.
“I think 2025 is going to be the year of the enterprise application,” Robbins added. “I think we’ve seen this focus on the training models that are out there and ChatGPT and Anthropic, and you got all these models that people are using. And I think now the enterprises are really figuring out what are the use cases that we can deploy.”
The AI product drop comes as Cisco’s stock has begun to perk up after being largely dead money for the past year amid several challenging quarters.
Shares of the networking giant are up nearly 20% in the past three months, outperforming the S&P 500’s (^GSPC) 7% advance. Rival Hewlett Packard Enterprise (HPE) stock is down 3% in the last months.
Cisco’s stock has still underperformed, gaining only 9% in the past year compared to a 40% improvement in the S&P 500.
The stock’s recent resurgence stems from better-than-expected fiscal fourth quarter earnings in mid-August. Cisco surprised some on the Street by delivering product order growth of 14% and sounding optimistic about the integration of its $28 billion purchase of Splunk.
The Street is also growing comfortable that Cisco will have a key role in building out the world’s AI infrastructure like it helped lay the structural pipes as the internet took off in the 1990s and early 2000s.
Networking sales —a key driver of sentiment on Cisco’s stock — rebounded in the quarter, spurring hope for further gains over the next 12 months.
“We do think there is a lot of upside potential in the current guidance, and critically, there are multiple levers for upside in FY25 across revenues and margins,” Evercore ISI analyst Amit Daryanani wrote in a note to clients. Daryanani says a successful integration of Splunk and ongoing improvement in networking demand is key to his Outperform rating on Cisco’s stock.