Cisco Systems raised its annual revenue forecast Wednesday, banking on multi-billion-dollar data center expansions to drive demand for its networking equipment.

Shares of the San Jose, California-based company rose 4% in extended trading.

Tech firms are investing tens of billions of dollars to expand data center operations in response to the surging adoption of AI models.

Companies such as Cisco are reaping the benefits as businesses increasingly migrate workloads to the cloud and upgrade campus infrastructure to support the growing demand of AI technology.

The company expects fiscal 2026 revenue to be between $60.2 billion and $61 billion, compared with its prior projection of $59 billion to $60 billion.