Cisco's AI Boom Faces Challenges: Trade War Fears Weigh on Stock

A difficult macroeconomic environment and mounting trade war threats have caused Cisco's stock to struggle despite the company's robust AI-driven growth and $700M in infrastructure orders.

Cisco Systems has unveiled the AI factory architecture, which was created in partnership with NVIDIA, as part of its portfolio expansion. It is anticipated that this would increase Cisco's AI-driven profits. As the first half of fiscal 2025 came to a conclusion, Cisco had orders for AI infrastructure totaling over $700 million. In fiscal 2025, CSCO is still on target to purchase more than $1 billion worth of AI infrastructure.

Deals to purchase Cisco's integrated systems, such as Nexus, UCS, and other technologies to support AI applications, have been inked by AI-driven businesses. The growing use of industrial security and robotics driven by AI is encouraging for CSCO's industrial Internet-of-things division. Orders increased by more than 40% in the first half of fiscal 2025 and by more than 50% in only the second quarter.

But would the stock rise in 2025 due to robust AI-driven growth? Due to a difficult macroeconomic environment and the growing risk of a recession brought on by tariffs on China, Mexico, and Canada that have raised the prospect of a trade war, Cisco's stock is down 6.2% so far this year. In addition to these issues, CSCO has been facing fierce rivalry in the networking industry.