Cisco Systems' AI Business Attracts Jim Cramer's Attention

Jim Cramer likes Cisco Systems (CSCO) due to its AI business, but notes the stock is down due to disappointing security performance. Cramer interviewed CEO Chuck Robbins, who discussed the company's AI infrastructure, which has exceeded initial targets. However, Cramer believes some AI stocks hold greater promise for higher returns and limited downside risk.

Cisco Systems Inc. (NASDAQ:CSCO) reported explosive growth in AI-related infrastructure orders, surging past $2 billion for fiscal 2025. The company's CEO, Chuck Robbins, declared the company is "well positioned for the AI era," despite caution over global tariff uncertainty. The record AI orders represent a massive success for the networking giant, more than doubling the initial $1 billion target set just one year ago [1].

The surge in AI orders, driven by tremendous demand from "web scale" cloud providers, exceeded $800 million in the fourth quarter alone. This cemented Cisco's role as a key supplier for the AI build-out. However, the company's forecast for fiscal 2026 revenue of $59 billion to $60 billion came with a significant caveat. The forecast assumes the current, complex tariff landscape remains unchanged [1].

Chief Financial Officer Mark Patterson noted that the forecast factors in existing tariffs on goods from China, Mexico, and Canada, signaling that any future trade policy shifts remain a key risk factor. Robbins also highlighted strength in other revitalized segments, particularly security, noting that while overall security growth was modest, the company’s strategic focus on new products is paying off [1].

Despite the impressive AI performance, the stock slipped 1.56% on Wednesday to $70.27 and was down slightly in after-hours trading. Jim Cramer, who likes Cisco Systems due to its AI business, noted the stock is down due to disappointing security performance. Cramer interviewed CEO Chuck Robbins, who discussed the company's AI infrastructure and the challenges posed by tariff uncertainty [3].

Cramer believes some AI stocks hold greater promise for higher returns and limited downside risk. He acknowledged the potential of Cisco but emphasized other AI stocks with higher returns and limited downside risk [4].

References:
[1] https://www.inkl.com/news/cisco-s-ai-orders-surge-past-2-billion-ceo-says-well-positioned-for-the-ai-era-but-tariff-uncertainty-tempers-guidance
[2] https://www.crn.com/news/networking/2025/cisco-ceo-record-ai-infrastructure-orders-highlight-undeniable-capability-and-relevance-of-cisco-portfolio
[3] https://finance.yahoo.com/video/cisco-operating-complex-environment-says-161934902.html
[4] https://finance.yahoo.com/news/cerence-inc-crnc-might-hidden-210101086.html