Cisco sees AI demand driving data centre networking growth

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Cisco AI data centre growth

Highlights

Cisco signed over $10 billion in deals with hyperscalers and neocloud providers this fiscal year, driven by surging AI infrastructure demand.
Cisco posted 35% growth in bookings and 18% growth in revenue last quarter, attributing gains directly to increased demand for advanced networking in AI clusters.
Cisco expects 70% of its software products to be entirely AI-written by the end of next year and will spend about $8 billion on R&D in 2024.

AI infrastructure strategy and growth outlook

As reported by the Financial Times, Patel says Cisco’s recent momentum in AI is tied to a shift from chatbot use cases toward AI agents that require far more network capacity inside large computing clusters.

He argues that GPUs deliver little value without the networking layer that links them, and says Cisco’s advantage comes from building silicon, switches, photonics, optics and software across a vertically integrated stack. Patel compares that approach to Apple’s model, but for infrastructure, and says control over key components gives Cisco a stronger supply chain position than rivals that depend more heavily on outside silicon suppliers.

Patel says the company has signed more than $10 billion in deals with hyperscalers and neocloud providers this fiscal year. He also says Cisco’s last quarter showed 35% growth in bookings and 18% growth in revenue, which he presents as evidence that AI demand is translating into business gains rather than only lifting the wider sector.

On valuations, Patel says a bubble can coexist with a long-term structural shift, with some business models likely to fail while others emerge as durable winners. He says the danger for Cisco is not excessive speed but a prolonged period of undercapacity if AI demand remains strong.

Internal AI rollout and rising security risks

Inside Cisco, Patel says the company is using AI not only as a productivity tool but as a way to build products that would otherwise be difficult to develop. He says one product has already been written entirely with AI, with six more expected by the end of this calendar year, and that by the end of next year 70% of Cisco’s software products are expected to be fully AI-written.

He rejects the view that AI will simply eliminate jobs, saying technological leaps tend to create new human bottlenecks elsewhere. Patel says Cisco’s restructuring is aimed at shifting resources toward areas such as silicon and photonics where demand is strongest, while overall research and development spending is set to reach about $8 billion this year.

Patel also says Cisco has pushed employees to adopt AI tools aggressively, arguing that workers who fail to use the technology risk falling behind. He says early-career and highly experienced staff adapt fastest, while mid-career employees often need more training, incentives and clearer expectations.

On cyber security, Patel says AI raises risks as well as defensive capabilities. He says attacks and harmful outcomes may increasingly come not only from malicious actors but from agents exercising poor judgment, making real-time controls and guardrails essential as companies try to keep security defenses ahead of rapidly advancing models.

In our earlier coverage of growing cyber risk in data centers, we explained why attacks on major operators are becoming an underappreciated threat not only to uptime but also to credit quality across a wide set of stakeholders. We also noted that the exposure extends beyond operators to tenants and to financing channels such as project finance and asset-backed securities, as data centers become even more critical infrastructure in an AI-driven economy.

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