Cisco posted robust second-quarter results that rode continued strong uptake of the networking giant’s artificial intelligence (AI) efforts and are set to bolster the vendor’s position in the rapidly evolving networking space.

Cisco CEO Chuck Robbins said the vendor’s AI-related sales to its large, webscale customers surpassed $350 million during the quarter, pushing that mid-fiscal quarter amount to $700 million and safely on its way to more than its forecast of $1 billion in full-fiscal year revenues. Three of the top six webscale providers increased their spend by a triple-digit amount, while two of the six increased their spend by at least 50%.

Cisco’s AI products include its Silicon One chips, integrated switches, and optical components. Analyst firm William Blair previously note that Cisco’s math could be undervaluing the AI data center opportunity, though it did add that “Cisco faces tough competition from vendors like Nvidia and Arista who are also targeting sizable deployments across these same webscale customers.”

Robbins did add that Cisco expects AI to drive networking opportunities around AI training infrastructure for webscale customers; AI inferencing boosted by Nvidia-based HyperFabric and Nexus switches; and enterprise AI network connectivity upgrades.

Those AI-enabled networking opportunities could help boost Cisco’s networking business, which posted a 3% year-over-year drop in revenues during the quarter. CFO Scott Herren said that drop was due to a decline in server sales that offset gains from Cisco’s wireless and switching products, and also attempted to smooth that decline by noting the previous year’s total was boosted by pandemic-related elevated backlog shipments.

Cisco last year as part of a broader corporate restructuring deprioritized its networking operations in favor of greater growth opportunities in the AI, security, and cloud space. However, an expected surge in AI traffic is putting an increased focus on cloud and data center networking capacity.

William Blair in a recent enterprise-wide report noted Cisco was being hit by increased competition from networking rivals like Arista, Juniper, and HPE. “Within networking, customers are not ripping out Cisco wholesale, but are starting with one network segment (e.g., wireless, data center) and expanding from there,” the research firm wrote.

Cisco’s networking presence remains robust Cisco remains a networking giant, highlighted by that business having landed square in the middle of Hewlett Packard Enterprise’s (HPE) now challenged attempt to acquire Juniper Networks for $14 billion. The Department of Justice (DOJ) has filed a lawsuit to block that deal citing a consolidation of giants in the wireless LAN space led by market heavyweight Cisco.

Some analysts have questioned the DOJ’s reasoning, claiming that combining Cisco’s wireless LAN market share of more than 40% with the approximately 20% of a linked HPE and Juniper does not fully flesh out the market’s competitive balance. Regardless of the DOJ’s reasoning, the lawsuit is expected to further fuel uncertainty in the market.

Cisco’s management has hinted that the pending HPE-Juniper deal has caused some consternation among enterprise customers to the benefit of Cisco.

“I think for sure that’s created just a degree of uncertainty and a question of, hey, should I consider if I was previously a vendor or a customer of either of those, now is the time to kind of open up and look at other opportunities,” Cisco CFO Scott Herren said during an investor conference late last year. “And we’ve seen our wireless business, our orders greater than $1 million grew more than 20% in the fourth quarter.”

This notion has been backed by some analysts who have heard enterprises are indeed being impacted.

“I’ve had customers put things on hold right now, and not just the Juniper side but both sides,” Andre Kindness, principal analyst at Forrester Research, said in an interview with SDxCentral about how Juniper and HPE customers are reacting to uncertainty around the deal. “Typically, if customers are strong enough to look outside of Cisco and they’re not a Cisco shop, then HPE, Aruba, Juniper are the primary ones that they’re looking at. I’ve had customers put some of that on hold at this point.”

Kindness did add that Cisco’s ability to take advantage of this opportunity would reverse what has been a declining presence by the vendor.

“Over the last 10 years, Cisco has been losing market share,” Kindness explained. “How is explaining that you have to be on par with Cisco’s market share or product wise if they’ve been losing share for 10 years? The whole bigger, better thing to compete against Cisco doesn’t equate to what the numbers are showing.”

Is Splunk on track? Cisco’s Splunk integration during the latest quarter also remained on track. Splunk-related revenues were basically in line with expectations, highlighted by an outsized revenue impact from that business.

Cisco’s Robbins stated that Splunk’s impact will accelerate as the platform is integrated into new services and then rolled into enterprise sale’s cycles.

“We are beginning to see that and we'll continue to see it as we go forward,” Robbins said. “I think you'll see as we get into the next couple of quarters, you're going to see more and more cross-selling sales incentives that the teams are putting in place that I think will continue to accelerate that.”

Robbins also said that former Splunk CEO Gary Steele, who took on the president of go-to-market role at Cisco following close of that acquisition, would be leaving Cisco at the end of its current fiscal quarter. That would mark a one-year stint for Steele following the deal’s conclusion, with Robbins adding that Steele will be heading for “an external CEO opportunity.”