Nokia shares climbed over 7% on Thursday following a strong quarterly print from Cisco that energized investors across the networking sector. Cisco’s results and updated outlook, especially around AI infrastructure demand, helped lift sentiment for companies that sell networking and optical equipment.
For the quarter ended April 25, Cisco reported revenue of $15.84 billion, a 12% increase from the prior year. Net income rose to $3.37 billion, or $0.85 per share, up from $2.49 billion, or $0.62 per share, a year earlier. Networking revenue was particularly robust, jumping 25% to $8.82 billion, outpacing analysts expectations of $8.47 billion.
The market reacted sharply: Cisco shares surged by more than 18% in U.S. premarket trading. That uplift extended to peers, with Nokia among the beneficiaries as investors priced in stronger demand for the kinds of infrastructure equipment it sells.
Drivers behind the beat
Cisco attributed part of its strength to rising corporate spending on high-speed networks to support AI data centers. The company said networking product orders increased by more than 50% year-on-year during the quarter, while data-center switching orders rose by more than 40%.
Those order trends translated into materially larger AI-related commitments: Cisco has received $5.3 billion in AI infrastructure and hyperscaler orders so far this fiscal year. It raised its full-year AI order forecast to $9 billion from $5 billion and lifted its revenue outlook for that market to $4 billion, up from a prior estimate of $3 billion.
Nokia, which also sells networking and optical equipment used in AI-driven infrastructure buildouts, had recently raised its growth targets for its AI business. Last month the company increased its projection for the addressable market for AI and cloud to expand 27% annually between 2025 and 2028, up from a prior estimate of 16%.
Guidance and cost actions
Looking ahead to its fiscal fourth quarter, Cisco provided guidance for adjusted earnings of $1.16 to $1.18 per share on revenue of $16.7 billion to $16.9 billion. Those figures sit comfortably above analyst expectations of $1.07 per share on $15.82 billion in revenue.
The company also announced it will reduce headcount by fewer than 4,000 roles this quarter, representing less than 5% of its workforce. Related severance and restructuring charges are expected to total $1 billion, with roughly $450 million to be recognized in the fourth quarter.
The combination of stronger-than-expected top-line growth, very large year-over-year order gains in networking and data-center switching, and heightened AI-related bookings and forecasts provided the immediate catalyst for the sector-wide move. For suppliers of networking and optical equipment, the report served as confirmation of accelerating corporate investment in infrastructure to support next-generation workloads.