Cisco surges on strong earnings, CEO says customers will spend on AI until “they just absolutely have to stop”

Cisco is the top-performing Nasdaq 100 stock in early trading after the networking products company posted a solid earnings report for its fiscal third quarter, exceeding analysts’ expectations on the top and bottom lines. In addition, its fourth-quarter guidance was above what the Street had penciled in.

Reports of the death of AI demand have been greatly exaggerated, and Cisco is one of the many beneficiaries of the ongoing spending: management said that AI infrastructure orders surpassed their $1 billion target for the year with one quarter to spare.

“AI orders from enterprise customers continue to show momentum as this large, nascent market opportunity starts to unlock,” CEO Chuck Robbins said, adding that tariffs and macro uncertainty hadn’t really sparked any “meaningful change” in customers’ purchasing behavior.

“They’re still committed to the technology transition,” he said. “I think the AI transition is just so important that they’re going to continue to spend until they just absolutely have to stop. And I think that as of right now, they’re still comfortable.”

Call it a tale of two Chucks, because that last remark reminds me of an infamous comment from Citi CEO Chuck Prince in July 2007: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

I am certainly not suggesting that a financial crisis lurks around the corner. However, it is meant as a reminder of how deeply corporate decision-making and incentive structures are molded by booms.

When your share price becomes a function of how dedicated the market perceives you to be with a mania in progress (and to a certain degree, how much your operating results can back up your claims about that), the biggest perceived risk, above all else, is not being involved enough.