(Reuters) – Cisco Systems raised its annual revenue forecast on Wednesday, a sign of improving demand as the computer networking equipment maker focuses on cybersecurity, cloud systems and cloud-based products. AI.

Companies have increased their investments in AI technologies that require significant computing power, creating strong demand for data centers, which use Cisco products such as Ethernet switches and routers.

“Our customers are investing in critical infrastructure to prepare for AI, with the breadth of our portfolio,” CEO Chuck Robbins said in a statement.

Cisco is a major provider of networking equipment, including Ethernet switches, which connect devices such as computers, laptops, routers, servers and printers to a local network.

The company announced two rounds of layoffs this year in a bid to cut costs and focus investments in areas such as cybersecurity.

Cisco completed its $28 billion acquisition of Splunk in March, which aims to boost its software business amid a boom in AI while helping offset slowing post-pandemic demand by improving its cybersecurity capabilities.

Cisco now expects annual revenue of between $55.3 billion and $56.3 billion, up from a previous forecast of between $55.0 billion and $56.2 billion.

Its revenue fell 6% to $13.84 billion for the first quarter ended October 26, compared with an estimate of $13.77 billion.

The company reported adjusted earnings per share of 91 cents, compared with an estimate of 87 cents.

Rival Arista Networks forecast fourth-quarter revenue above Wall Street estimates earlier this month.

(Reporting by Jaspreet Singh in Bangalore; editing by Maju Samuel)