‘Businesses Don’t Like Uncertainty’: How Cisco Is Navigating AI and Trump 2.0

0:28Searching for a home? Hey Tim, what do you know about the tech that powers the guts of the internet? It's a series of tubes, right? So many tubes. At least if by tubes you mean data centers, servers, routers, networking cables, fiber optics, and silicon chips. One of the most important companies behind all these components is Cisco, and we'll hear from its CEO on how he's tackling the rise of artificial intelligence. That's next.

0:58Last week, for the first time since his return to the White House, President Trump sat down with the influential lobbying group The Business Roundtable for a Q &A. I have a lot of friends in the audience, a couple that I don't like particularly much, but for the most part, very good. The Business Roundtable is made up of the CEOs of some of the biggest and most influential companies in the United States. Those include Walmart, Apple, and JPMorgan Chase. And one thing a lot of them wanted to hear about was Trump's plan for tariffs. A lot of activity is happening. They're looking all over the place for places.

1:34And that's because there is a good spirit. There's a renewed spirit. And also, very importantly, the tariffs are, they don't want to pay 25 % or whatever it may be. It may go up higher. It may go up higher. Look, the higher it goes, the more likely it is they're going to build. And up on the stage asking questions was our guest today, the chairman of the Business Roundtable, Cisco CEO Chuck Robbins. The people in this room, we're going to tie us back together. The people in this room obviously are very interested in all the conversations going on around trade and tariffs that are important here.

2:07And then you've also had a large scale effort to root out wasteful spending in the federal government. And I believe there's a thread that kind of ties all that together. Few people sit at the nexus of politics and artificial intelligence like Robbins. His company provides the guts to the modern internet and seemingly is in a perfect position to help other companies build the infrastructure required to develop AI. The new Trump administration has provided a lot of drama in the early weeks. But Robbins says CEOs remain optimistic about an administration willing to work with the business community.

2:40The thing that businesses don't like is uncertainty. So in the areas where there's still uncertainty, like what happens with tariffs and things of that nature, it's a little more complicated. But I think in general, that enthusiasm is still there. And I think that his administration is engaging with the business community already. So that's a good thing. From the Wall Street Journal, I'm Christopher Mims. And I'm Tim Higgins. This is Bold Names, where you'll hear from the leaders of the bold name companies featured in the pages of the Wall Street Journal. We spoke with Robbins ahead of the latest meeting of the Business Roundtable, and we asked him, what advice is there for business leaders trying to navigate an uncertain world with the rise of both AI and a new power in the White House?

3:25Mims, did you realize that one of the three people on today's podcast used to play basketball with Michael Jordan, and it wasn't me? Oh, wait, are you saying, I thought it was me playing the 1994 Super Nintendo hit? Michael Jordan chaos in the Windy City. Yes. Wasn't me either? Wasn't you. But let's welcome Amon. Chuck Robbins, thanks for being here with us today. Yeah, just to be clear, guys, the stories about that are much, much greater than the reality of what actually occurred, just for the record. Was it one-on-one streetball? Did you take him? Oh, yeah. Yeah. Anytime I tried to guard him, I gave him all the confidence he needed to be successful later in his career, trust me.

4:05Well, before we get into what Cisco is doing on the very hot topic of AI, your thoughts on the early days of Trump 2.0, I am curious what you learned about competition from playing back then in the days in the university and being a competitor. Well, I think, first of all, let me just clarify. I played junior varsity, so I was on kind of the freshman team, but it wasn't the freshman team because you could play on it multiple years. And so there were times where I would end up practicing with a varsity because they had injuries or something of that nature. or so. But I did know Michael through high school because my father's from Wilmington, and we used to go down and spend a lot of time there.

4:40So we played pickup ball with him and his brother, Larry, et cetera. And it's turned out to be a very popular topic with people for some reason. But anyway, I think all sports teach you the power of teamwork brings out your desire to win. That becomes evident. I think so many great leaders were good athletes at some point in their life. I just think there's a correlation there. And I was a mediocre athlete who turned out okay. All right. I'm keeping my kids in sports. Thank you for the pep talk. It's a good call. Well, it seems like you're winning now and Cisco shares have been on a tear this year with the company's market value reaching levels that we haven't seen in a generation.

5:25I was looking at the chart beforehand and shares are, seems like they almost touched a 20 or high. Is that excitement all about AI? It's not completely about AI. We're seeing strong growth across our enterprise networking business. We're seeing strong growth across our security portfolio, a lot of revamped innovation and security. But AI has a lot to do with it. I mean, we've made a ton of progress with the hyperscalers. And I think this year, we anticipate that this will be the year where you'll see broad-based use cases popping up in the enterprise, which is where we have traditionally been strong, which is sort of the core of the first phase of our NVIDIA partnership that we announced.

6:05So it's a little bit of everything. Okay, that's a lot to unpack. I want to unpack it for what I think of as our target audience. Shout out to Matthew, who I just found out is listening. He's a friend of a friend. And he is a kind of like retail investor who probably doesn't even know what Cisco does. And, you know, in my mind, going back 20 years, y 'all make the guts of the internet, the thing that connects computers to each other. Everyday people don't think about this because, you know, they're not building the data centers where AI happens. But if I know nothing, absolutely nothing about your business, what do you do?

6:46Yeah, I always tell people that if we didn't do what we do, most other tech companies couldn't do what they do. And every time you hit enter on your mobile device to try to get some information or engage with social media, odds are that it's running through our products to actually make that happen. So we provide the underlying connectivity layer for the internet along with corresponding security, collaboration tools, et cetera. And I think when you think about AI and the hyperscalers or the cloud players, in a simple terms, we actually connect the GPUs. We connect all the enterprise networks, all the enterprise users around the world.

7:25And we just try to keep things running on a daily basis. So just to unpack that a little more, when you say hyperscalers, you mean like the big companies that build out all these data centers where the computing actually happens and the internet lives. And, you know, so everybody you might think of, Microsoft, all the rest of the big companies that are building that stuff out. You're providing the connectivity between the chips that NVIDIA makes. And then in their traditional cloud infrastructure as well, underneath their compute that enterprise customers are actually taking advantage of also.

8:02Speaking of the cloud, you have talked, I think you've been pretty open about this, that Cisco missed the cloud initially, and you weren't going to do that again with AI. And I'm curious, what's different about AI now, What are the signals that you are seeing compared to the signals that Cisco saw about the cloud that were missed? I think we're well positioned because, number one, we design our own silicon. So we build systems that have our silicon, the actual system itself, software stack and everything. So we have a complete solution. And the silicon is so important because, number one, these large cloud players, they want silicon diversity.

8:42So they want to have silicon from multiple, at least two different providers so that they have obviously supply chain backups. They have technology backups should want to have a problem. And so us being in that space has been a big part of why we actually are winning there. And we also are just moving faster when we see some of these mega trends occur. We've launched a lot of products around the space. We've combined our security with this AI trend. We launched AI Defense, which is a new category maker for AI security for these language models. And I just think we have a good team. We have the right assets, and we're moving very fast.

9:20And I'm very interested in talking about AI Defense in just a minute. But I wonder if – is there something about the culture that you have now that is ready for AI, ready to jump on that trend or take those risks? Whereas cloud, maybe you didn't see the trend coming? I think the big problem with cloud was it was deemed to be virtually 100 % negative for us. Everybody believed that enterprise customers were not going to need networks anymore. And also, we didn't have the right products at the time to actually provide the infrastructure to the cloud players. So we worked hard to build our credibility back and build the products that they needed for the cloud infrastructure, which we are now selling into in addition to the AI infrastructure.

10:12So it was a little bit of both, but it's all about having the right team as well. And we have a team right now, back to the comment about sports and athletics. We have a team that is super motivated to win, that very motivated to move fast, and has really been out on the front edge of this AI transition. In some cases, we're building technologies before we really know exactly what the enterprise is going to do. We're ahead of the transition in the enterprise, which is a good place to be, and we'll adapt and shift as we need to. But I think it's a combination of all those things. We just heard how Robbins is trying to make sure Cisco doesn't miss the boat on AI, like it did with cloud computing, at least at first.

10:58But does this moment also compare to one of the company's historic highs during the dot-com bubble? Back then, a lot of that was being built out by customers who didn't have real business models or had very ambitious, hopeful business models. It's being built out today, in many cases, by large companies who have very high cash flow and very high profitability, and they can afford to lead this industry. Stay with us.

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12:03it's really challenging right now i think if you're running a company and you're looking at ai because it's moving so quickly right and you're seeing these huge dollar signs being attributed or being spent on investments and if you're a company you know how do you play you feel like you need to be there but you're not quite sure how i'm curious you're talking to these companies What is that conversation like? What are the reluctance that you're hearing about getting into AI? What are the concerns? Well, I think there's probably three areas. Number one, identifying the high-value use cases, which there's some that are pretty consistent across the industry right now that you're seeing, particularly in customer service and call centers.

12:44Second is security, defense, security and trust, and ensuring that your proprietary data doesn't land in some public model somehow. I think there's concern over just making sure that that's occurring or that you're not using AI to come to the wrong conclusions about how you should interact with a customer and having some engagement that's driven by an AI agent that ends up either offending or giving wrong information to your customer or, God forbid, releasing proprietary information about a customer that it shouldn't. That's the second. And then the third is just talent. There's a lot of talent needed across all industries.

13:24But we're beginning to see some emerging ones. I mentioned the call center space. We're seeing, you know, manufacturing robotics in that space. We're starting to see edge applications around predicting customer behavior and engaging with customers. It's there. They're coming. And I think the fact that you guys said it, one of you said it a few minutes ago, the fact that this is moving so quickly, the developments that we see happening now are actually, I think, expediting the clarity of the enterprise. is going to have around what they can do with AI. Let's talk about this moment of excitement that we're in now, because it does feel reminiscent to me of another moment in Cisco's history.

14:04I mean, nobody, you know, in 1998, 1999, things got a little maybe overheated, definitely overheated in the market, but it wasn't like the internet wasn't ultimately going to be huge, right? That was why everybody got so excited. you know with cisco being you know within spitting distance of your all-time highs it feels like once again investors are looking at cisco as you know their infrastructure and what everybody's going to need more of is infrastructure and more compute for ai um but are you concerned though i mean we know from our own reporting 2025 we're going to see record capex from all the hyperscalers uh but you know who's to say what's going to happen in in 2026 and beyond a lot of it depends on whether there's enough end user demand are you concerned that we could be kind of at a peak now which you might be the bellwether of and and and at the very least things are going to plateau from here or we could even see a little bit of a pullback because people are building so much data center infrastructure right now it reminds me of the the you know the fiber build out days from the late 90s.

15:14I think the difference is back then a lot of that was being built out by customers who didn't have real business models or had very ambitious hopeful business models. It's being built out today in many cases by large companies who have very high cash flow and very high profitability and they can afford to lead this industry. But I think the other thing to consider is when the enterprise applications take off, the amount of data in the private enterprises dwarfs what's available in the public internet. So when our enterprise customers truly start training on their own proprietary data and then start driving inference applications, and then we see edge-based robotics, or you see real robots that have LLMs actually inside the robot, and the amount of networking bandwidth you're going to need to have that interact real time with other data, we don't expect that it's going to be a meaningful slowdown.

16:13I mean, obviously, there's a lot of macro things that could happen to actually slow it down a bit. But I think in general, you have a group of leaders, both in the technology side, as well as in general business, that have grown up understanding the power of technology, the strategic differentiation you can create with technology, and the risk that gets created if you don't invest at the right pace in technology. And I think AI is both, it excites our customers about what's possible and it scares them to death about what happens if their competitor uses it more effectively than they do. So I don't anticipate that there's going to be an issue with the technology itself.

16:53I think that if there is any kind of slowdown, it might be driven by some sort of macro shock, but hopefully we don't see that either. Well, I think you're kind of at what's the business model? How do you see kind of the model for compensation in this world? I think the misconception about what happens to the LLM players like an open AI, I think there's this belief that they get all the training stuff done and then they don't have any more ideas. And that's not the case because what they're going to do is build agentic capabilities on top of their models. And we're already seeing that happen. So they're going to continue to move up the stack.

17:33And I think that you can leverage any pricing model that you think of. You think about a network administrator in our space, so someone that just operates the network. If we can create an agentic network operator for basic network operations functions, and we can sell that technology integrated in a hardware stack that includes compute and everything else. I got to jump in just because I'm always curious about this with agentic AI. I've yet to see an agentic AI application where folks didn't need some kind of human oversight. So do you see this as something that enhances the ability of the kind of IT administrators who you are already selling to, to do their job?

18:19Or do you see it as a genuine replacement at some point? I think what you'll see early on is you're definitely going to need human oversight because you're going to see this agentic network operator, as an example, that is going to go through and make a lot of recommendations. And you're going to scan them and say, yeah, those make a ton of sense. Just hit enter and deploy. I think over time, you'll become more comfortable with certain aspects of that. And then you'll agree to let it autonomously do certain tasks because it's proven that 99.9 % of the time they're accurate. And by the way, the humans aren't accurate 100 % of the time either.

18:54So it's, it's, uh, you know, and I think that's how it'll play out over time. And so there's slowly, I don't think it replaces people per se. The way we think about it is it just continues to allow you to move your people up the stack of up the value stack and work on things that are more important. Um, you know, people talk about coding and do you replace programmers. And my view is they should augment our programmers, our engineers, so that we can compress our roadmaps for our customers by 75%. And if we can do that, it just picks up the pace of our business. The rise of AI could bring big changes to the business world.

19:36Another, President Trump's early months back in the White House, as Elon Musk's Department of Government Efficiency, or DOGE, takes a chainsaw to the federal workforce. What is Robbins hearing from his corporate counterparts amid the upheaval in Washington, D.C.? There's certainly a need in most big organizations for greater efficiency. I think that's always the case. And there are multiple ways to do it. You can go with a brute force approach, or you can spend a lot of time doing a lot of analytics and hope you get it right. That's next.

20:25You lead a large company. You're accustomed to doing restructurings over the years. I think your last one was maybe last year as you kind of put more emphasis on AI. I, we're watching another very large reorg occurring in public life right now in the government with Doge and in DC. As a business leader, as you watch how they're going about their reorg, what do you, what's, how do you rate it? How are they doing? Well, I don't know that I'm going to rate how they're doing because I think that there's certainly a need in most big organizations for greater efficiency. I think that's always the case.

21:00And there are multiple ways to do it. you can go with a brute force approach or you can spend a lot of time doing a lot of analytics and hope you get it right. And so there's the break things fast and then fix what broke, or there's the take more time and do the analytics and see what you come up with. And I wouldn't argue that either one is right or wrong. I think that, you know, getting to the efficient end state that you're looking for is most important. I do think it's important to ensure that, you know, you remember that there are humans, there are people involved who have mortgages and who have families and all that.

21:42I think that's how you treat them is really important, in my opinion. You lead the business roundtable. I imagine you hear from a lot of CEOs who are trying to gauge what's going on in D.C., assuming that you have kind of the ear to the ground. What's your advice to those CEOs who are trying to navigate Trump 2.0? I think it's, look, you just have to be agile for sure. And to the extent you can, you need to engage. Obviously, there's going to be a lot of tax legislation, and we have a super active effort to work with them to just try to help craft that in a way that drives growth in the country and drives job creation and drives strength in the U.S.

22:24economy. And, you know, all the big issues, we have tracks that are trying to do exactly that, you know, pro-growth agenda for the United States, which aligns with what President Trump's agenda and his objectives are as well. It seemed like in the early days, right after the election results were kind of in, there was some excitement among the business community about what was possible that the Trump administration perhaps was seen as going to be willing to listen to business leaders. Is that enthusiasm still there? The thing that businesses don't like is uncertainty. So in the areas where there's still uncertainty, like what happens with tariffs and things of that nature, it's a little more complicated.

23:03But I think in general, that enthusiasm is still there. And I think that his administration is engaging with the business community already. So that's a good thing. It seems like we're in an age when there are new channels to engage with this administration, maybe a lot more or different than certainly the previous administration. You know, I mean, not everybody on your business roundtable can be, you know, at Mar-a-Lago every week like Elon Musk was leading up to the election. What's the nature of the way in which the business roundtable is actually able to advise the administration? Well, I said engage, so I didn't say advise.

23:48But we do like to try to have conversations with lots of the cabinet members, U.S. trade, commerce, treasury, the economic advisors in the White House. It's not necessarily with President Trump. It's with the team that he has around him on the issues that they're each responsible for. So, you know, but really just talking through, making sure they're aware of some of the downstream implications that they may not be thinking about. Usually they are. At least then we know they know whatever decision they make. And that's sort of how it is. But I think they welcome the engagement. This administration is very business friendly and really likes to engage and have these conversations, which is really good for us to see.

24:35Let's circle back to AI. And as you look at the administration and the way they're talking about AI, where do you see the role for regulation and how David Sachs, who's a Silicon Valley investor who's now advising the president on AI, where do you think he should put his time and his efforts on? Look, I think, first of all, I think it's great that there are people who really understand this technology that are involved in these decisions, because I've often said that I've always felt sorry for the regulators in government because they're not technologists. And I know what it takes for me and others who are technologists to keep up with these changes.

25:17And AI makes everything before us look like it was moving in slow motion. So I think it's good. I think, look, you just got to make sure that we get the appropriate safeguards in place for things that you'd be concerned about. I think we learned a lot from the social media wave that we went through. But at the same time, you want to make sure that you're not impeding the leadership position that we have in the United States. Because the criticism about social media was that it maybe went too far. There was too much freedom there and it became harmful in certain ways. But then the debate becomes if you try to rein in some of that freedom, then it's hurting freedom of speech.

25:58And these are very complex subjects. And then you've tried to put AI on top of it. And where does that sit, right? Well, I think the good news in this transition is that even the CEOs of the AI companies and the folks that are deeply involved in this technology area were having this discussion in the early days of AI. We didn't have that discussion in some of the other technology transitions until much, much later in its maturity. And I think based on that, we'll get some of it right. We'll get a lot of it right. We'll probably make mistakes. I tell our customers all the time, we're going to make mistakes and we'll fix them.

26:37While we're talking about AI and this AI boom that we're in the middle of, one thing that's different about the dot-com era is I think in a lot of ways you have a lot more competition. And that's not bad. It's partly because the market, obviously, for what you provide for networking gear and the other software you provide is a lot bigger. but what you're seeing is you know hyperscalers like Meta they're creating their own you know custom hardware and software they're open sourcing it they have very particular needs you know that aren't going to be what others need you have upstarts like Arista who are you know in a lot of the data centers and you're probably competing head to head with you know you're still kind of king of the hill here, right?

27:30How are you following that path so that you're getting these great quarterly numbers that you're putting up versus just resting on your laurels? The big differentiator for us, two things I think that are differentiating us in this cloud AI space. Our entire engagement model with these customers is sit down, understand what they need. And in many cases, we're designing unique silicon for their specific use cases. So that's a massive change because we would build common systems and if they work for your use case, great. If they didn't, sorry. And that's not the way we're engaging with them now because they're big enough where we can do this.