{"id":49765,"date":"2023-08-17T17:45:05","date_gmt":"2023-08-17T21:45:05","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/opinion-ciscos-early-ai-traction-wont-save-it-from-an-anemic-year-ahead\/"},"modified":"2023-08-17T17:45:07","modified_gmt":"2023-08-17T21:45:07","slug":"opinion-ciscos-early-ai-traction-wont-save-it-from-an-anemic-year-ahead","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=49765","title":{"rendered":"Opinion: Cisco\u2019s early AI traction won\u2019t save it from an anemic year ahead"},"content":{"rendered":"
\n

Cisco Systems Inc. may have reported its strongest annual revenue growth in a decade, but it\u2019s headed down a much more anemic path this fiscal year \u2014\u00a0and even early traction with artificial intelligence won\u2019t save it from that fate. <\/p>\n

On Wednesday, the networking giant reported a better-than-expected fiscal fourth quarter, including a 16% boost in revenue that helped bring its annual growth rate to 11%. But Cisco
\n CSCO,
\n +3.34%<\/bg-quote>
\n also delivered a dim outlook for its current fiscal year, which translated to expectations for revenue growth ranging from a flat performance to a roughly 2% increase. <\/p>\n

\n

While Cisco\u2019s management explained that comparisons could be confusing in fiscal 2024 because the company used fiscal 2023 to catch up on orders that it previously couldn\u2019t deliver due to supply constraints, they also noted that some telecommunications customers are still \u201cdigesting\u201d infrastructure that they bought over the past few months.<\/p>\n

Furthermore, executives told analysts that they currently have $500 million in current orders for AI-related equipment, with many of those orders coming from hyperscaler companies that they declined to name. But it is not clear yet how much of that $500 million will come in fiscal 2024, versus in fiscal 2025, because the networking technology is currently in flux and some customers are still trying it out.<\/p>\n

Cisco believes 800-gigabyte ethernet networks, which it sells, will offer higher performance than Infiniband technology for highly compute-intensive training of AI applications, but executives hinted that investors may need to be patient.<\/p>\n

\u201cAs these customers get more comfortable moving from Infiniband to ethernet, I think that\u2019s when we\u2019ll start to see the real impact of AI \u2014 and maybe it\u2019s late 2024, but I would suspect into 2025 for sure,\u201d Cisco Chief Executive Chuck Robbins said on the company\u2019s conference call.<\/p>\n

\u201cThis is very, very early in the build-out of AI infrastructure, \u201d CFO Scott Herren told MarketWatch after the call. \u201cA decade ago, when [Amazon.com Inc.\u2019s
\n AMZN,
\n -0.81%<\/bg-quote>
\n ] AWS and [Microsoft Corp.\u2019s
\n MSFT,
\n -1.10%<\/bg-quote>
\n ] Azure started to build out, they wanted a unique architecture and we were trying to sell them completed systems.\u201d This time around, though, Cisco is offering the option of either networking components or custom chips \u2014 or a complete system. <\/p>\n

\u201cWe will sell you chip sets, white boxes or completed systems,\u201d he explained.<\/p>\n

In addition to offering some of the \u201cpicks and shovels\u201d of AI, Cisco said it has been embedding AI into its products for years. The technology shows up in features like the ability to block out external noises from Webex video calls, or when IT administrators get warnings about potential security threats.<\/p>\n

The company may have learned from mistakes made during the cloud-computing buildout roughly a decade ago, but it could take time for Cisco to realize the benefits of its AI strategy. Until then, investors may want to pump the brakes on any celebrations over the company\u2019s last year of strong growth as they brace for a slower trudge ahead.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Cisco Systems Inc. may have reported its strongest annual revenue growth in a decade, but it\u2019s headed down a much more anemic path this fiscal year \u2014\u00a0and even early traction with artificial intelligence won\u2019t save it from that fate. On Wednesday, the networking giant reported a better-than-expected fiscal fourth quarter, including a 16% boost in […]<\/p>\n","protected":false},"author":1,"featured_media":10496,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-49765","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nOpinion: Cisco\u2019s early AI traction won\u2019t save it from an anemic year ahead | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Cisco Systems Inc. may have reported its strongest annual revenue growth in a decade, but it\u2019s headed down a much more anemic path this fiscal year \u2014\u00a0and\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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