Let people walk through. See, bro, now I need to warm up. Chuck Robbins, when he comes, we'll let people in. Chuck, thank you so much for joining us.
Thank you. I put on a tie for you. I'm not sure what Forge's problem is.
We can let people in if they want. We've got a couple seats. Bill needs to show more respect around here for these people. So this is Chuck Robbins, obviously CEO of Cisco and chairman of the Business Roundtable. Chuck, actually, let me start with something kind of where I ended with Bill. You started your career in sales. You were a salesperson. And when you think of Cisco and you think of AI and labor, are the way you came up, is someone still going to be able to come up the way you came up?
I started my career writing code, just to be clear.
Well, that's even worse almost right now.
Oh no, well, no, it's better. Well, if you take that piece of it, I think a lot of that's going to get, you know, if you can get 90% of the code written and then you have smart people assessing it, tweaking it and getting it right, yeah, you're just going to be more productive. I mean, you're going to get a lot more stuff built and the pace of technology development is going to just pick up meaningfully. On the sales front, look, at the end of the day, the relationships are most important. So I think a salesperson is going to use AI in a very big way and they're going to be super successful as a result of it. But we all know, I mean, it's all about relationships at the end of the day.
You've said that 2025 will be the year of the enterprise application. What does that mean and why this year?
I have no idea. It just sounds good. That's why I wrote it down. See, I didn't expect to have a follow-up on it. I thought it was just going to stand on its own and we were good. No, I just think enterprises right now, we did a whole AI survey of all the enterprise customers and, you know, we play deeply obviously in the enterprise and have for a long time. And you know, you got this strange dichotomy where it's like 33% of the customers say that they feel like they know what they need to do with AI, 85% say I've got 18 months or less to figure it out. So there's a big gap. And so if you look at that, that tells you in the next 18 months there's going to be a lot of activity. And we just engaged, we had a big launch last week that we can talk about. But I mean, these customers are just dying to learn more. We did an event in Palo Alto, we only had 110 people in the room and we had 40 Fortune 100 companies sitting there because they wanted to just take it in. And I think this year is where you're going to see some breakthrough applications.
When you talk with these clients, for the ones who seem to already be using it, do you have a sense of what's actually working as opposed to what's maybe not working?
I think there's a lot of interesting applications in healthcare that are being done today, like smaller hospitals taking advantage of data from larger hospitals so they can increase their cure rates. We're seeing some of that. We're seeing lots of analytics on manufacturing floors with cameras and data and intervening and predicting. Some of it's leveraging old AI and generative AI. But I will tell you the one thing that everybody's really worried about is they're worried about the security side and controlling this technology. And they don't know what to do. They just know it's a problem.
And you know what to do. Okay, I know what to do too. So we will. Do you mind if we have a conversation real quick? Do you think we're one major, major security breach away from the AI hype cycle slowing down a little bit?
Because I think we've proven that we can get past things pretty quickly. I mean, think about it. The risks that we are willing to take with these devices in our hands, the Salt Typhoon stuff that's been reasonably well documented in the press about what's been going on. I just think if something happens, we'll figure out how to solve it and then we'll move on.
But it doesn't slow down. Just for everybody here in very almost layman's terms, explain what Cisco's role in this AI revolution is.
So we are the connectivity layer first and foremost in the web-scale space. So we're one of three providers who actually build the networking technology that sits beneath the GPUs, so all the clusters, so these things communicate with each other. We have to actually make that happen and there are literally three companies doing it. We design our own silicon to actually build the products that they need. We're running parallel staggered development cycles on silicon now. We used to have like three-year cycles, now we're developing the next generation before we even get the current one out the door. And so we're building that in the enterprise space. We're building some integrated tech, we're a little bit ahead, trying to anticipate what we think they're going to need. We're building integrated stacks of storage, GPUs, CPUs and networking with security that has an orchestration layer to help enterprise deploy AI apps more rapidly. And then last week we had a launch of some pretty significant security technology around the space. So we're going to be very active in the security. And we're using it like everybody else is across our portfolio. We're looking at agentic AI right now and how we can sell network administrators, you know, virtual network administrators sort of integrated in.
Does that mean when we see this data center building boom that you look at that and you see dollar signs in your eyes?
Let me ask a similar question to Bill. Do you think the money is getting ahead of the actual building? Because again, this is brick-and-mortar stuff that has to get built. I see SoftBank and Trump talk about half a trillion dollars and I think that's great, but I can't find a contractor to do something at my house. Who is going to do this work?
Neither can I, by the way. Well, they're all working on data centers and related stuff, so you're right.
But a serious question to you. When you think about this, is the money getting ahead of the actual deployment of the money, the commitments?
Well, the commitment of the money, but I think if you read the thing, it's $100 billion that's largely been already committed and then there's a plan for the next $400 billion. So it's available or they'll go get it or whatever.
Were you guys approached about being part of that?
No, no, no. I think if I just look at the performance we've had selling into the web-scale space and, you know, we have these large customers who are literally sitting across the table from me saying, I will buy all you can sell me if you just increase your capacity. So I mean, Cisco hadn't been in that position in 25 years. We were in it once. And then the enterprise side, even the private data centers that we see right now, I think the last six quarters our data center infrastructure networking business has been booming. And at a time, you know, where we're coming off the 10-year cycle where everything's going to the cloud, no one's going to have private data centers anymore, which is absolutely untrue. And so it's a good time.
How do you personally, Chuck Robbins, if at all, do you use AI in your personal life? And when I say that, that can be your business life too, but not deploying it throughout Cisco. I mean for your actual job or your personal life.
Not a great deal right now, honestly. I've tried some of the tools and they're going to become really good over time. I find that some of the tools, if you use them to write notes to people, you don't get the proper relationship tone because it doesn't understand how well I know that person or how we communicate to each other. So I see them and I go, they're never going to believe I wrote that. You know, if David Solomon was mentioned earlier, Solomon and I are like really good buds. If I wrote him a note like that, he'd be like, what's wrong with Chuck? And so you find yourself rewriting them, which I could just do it all in the same amount of time. And I'm not trashing them, they're on a life cycle, they're going to be great. And the flip side is like summarizing stuff like that. I do summaries, I'm like, well, that's cool, what if it's wrong? I better go read it and make sure before I respond. So I'm not quite there yet.
Do you think internally, from your direct reports, do you ever get an email from them and think he or she did not write this?
So they're doing better than you. You don't think they're using AI to send you notes?
We don't have much relationship, so they just say something else. I don't get emails from my team.
Something else you said recently, maybe similar to the enterprise application, so this might be a bumper sticker more than anything else. But let me ask, you talked about how the return to work is leading to some new customer behavior. Do you believe return to office is the better way than return to work? Do you believe that's a real secular shift or do you think that's something that's going to ebb and flow?
I think it's a secular shift. Look, Bill and I, the reason Bill and I know each other so well, we're on BlackRock's board and the financial services industry is definitively making this move. We've made it.
When you say we've made it, what's the Cisco...
We've encouraged people to get back in the office, but in some cases we had a lot of small sales offices we closed. Before the pandemic we had 15% of our employees that worked full-time from home already, so we had already embraced this to a certain extent. And our teams are largely massively distributed, they're all over the place. So you tell somebody to go to the office, they go to the office and they get on video calls with their colleagues in another office. So every industry is a little different. But I think the people who are going to move forward in their career are going to be those who are interacting with their peers more effectively and exposing the great work that they're doing, which in many cases requires you to be face-to-face.
When your most recent earnings came out, one of the things you said was that you think the economy has finally gotten through the supply chain shock. Are you concerned that the period of normalization post supply chain shock is at risk with the Trump tariffs, with the potential of tariffs coming in? Are we in a short little honeymoon window and it's about to go away again?
No, I think the supply chain stuff was largely driven by the influx of dollars, the flooding of money into the United States and around the world, all the pandemic money that was put in the system. Tariffs could have the opposite effect. I mean, my fear on tariffs is inflation. And if we don't get inflation down, then we're not going to lower rates, which means the cost to service the US debt is very high. I know you all know this, but it's a staggering comment to say that we spend more servicing our debt than we do on our military in the United States. And so I think all of that has to be, and I think President Trump understands the real risk of inflation.
Do you think he believes though that tariffs lead to inflation, which is the conventional economic view?
