Cisco Eyes 10% Revenue Jump, AI Orders Surge 100%

Cisco Systems, Inc. (CSCO.US) is under the microscope of analysts, with a particular focus on two critical areas: AI orders and quantum computing. The company is set to release its third-quarter earnings report after the U.S. market closes on Wednesday, with expectations of increased revenue and earnings compared to the same period last year. Analysts predict that Cisco's third-quarter revenue will reach approximately $14.06 billion, marking a year-over-year increase of over 10%. The adjusted net profit is anticipated to be around $3.66 billion, or $0.92 per share, surpassing the previous year's $3.55 billion and $0.88 per share.

Among the 10 analysts tracked by Visible Alpha, three have given Cisco a "buy" rating, while seven maintain a "hold" rating. The average target price for the stock is close to $67, suggesting a potential 12% increase from the previous Friday's closing price. Cisco's stock has risen by about 2% year-to-date.

Analysts are particularly interested in Cisco's AI infrastructure orders. In February, the company announced that its AI orders for the second fiscal quarter exceeded $3.5 billion, bringing the total order value for the first half of the fiscal year to approximately $7 billion. This substantial increase in AI orders underscores the growing demand for AI-driven solutions and infrastructure, positioning Cisco as a key player in the AI market.

In addition to AI orders, analysts are closely monitoring Cisco's recent developments in quantum computing. Last week, the company unveiled a quantum computing chip prototype designed to interconnect quantum computers. Cisco also announced the opening of a new laboratory in Santa Monica, California, to further explore advancements in quantum computing. This chip utilizes some of the same technologies as current network chips, enabling the connection of small quantum computers into larger systems. Cisco believes that this chip will have practical applications even before quantum computers become widespread, such as assisting financial institutions in synchronizing transaction times or aiding scientists in detecting meteorites.

Cisco's entry into the quantum computing field marks a significant move by a mainstream technology company. Over the past few months, other major players such as Alphabet, Microsoft, and Amazon have also launched their quantum computing chips. Additionally, companies like NVIDIA plan to establish their own quantum computing labs, while startups like PsiQuantum have raised billions of dollars to build quantum computing systems. This collective investment in quantum technologies highlights the industry's recognition of its potential to revolutionize computational capabilities and problem-solving.

Cisco's strategic focus on both AI and quantum computing is poised to drive future growth and innovation. The company's ability to secure large AI orders and make significant strides in quantum computing will be pivotal in maintaining its competitive edge in the rapidly evolving technology landscape. As the demand for AI and quantum computing solutions continues to rise, Cisco's investments in these areas are likely to yield substantial long-term benefits.