Steve Eisman says the artificial intelligence boom is "for real," pointing to surging growth at Cisco Systems Inc. (NASDAQ:CSCO), but warns a price war with cheaper Chinese and open-weight models could test how long it lasts.
"The question is how durable is it?" Eisman said on The Real Eisman Playbook after Cisco investor-relations chief Sam Badri laid out how quickly AI demand is reshaping the networking giant.
Cisco’s AI Business Is Accelerating
Cisco reported in August that quarterly revenue jumped 18% to $17.3 billion. When Badri joined three years ago, Eisman noted, investors were questioning whether Cisco could even sustain roughly 5% growth.
Cisco said it booked $4 billion of hyperscaler AI infrastructure orders in the quarter, taking its fiscal 2026 total to $9.3 billion.
Badri told Eisman that Cisco’s hyperscaler business is on track to nearly double in fiscal 2027, although it still accounts for less than 20% of the company.
He said Cisco’s AI opportunity only became much more visible six to nine months ago, when orders for its Silicon One-based networking systems began arriving in much larger sizes.
Not all of Cisco’s growth is coming from AI. Badri said an enterprise network refresh cycle is also boosting sales as customers replace older networking equipment.
Cisco Says AI Adoption Is Still Early
Badri argues the AI infrastructure boom may still be in its early stages because most users have barely moved beyond basic prompting.
"The fair majority of people that use these tools today are in the beginner stage. It’s probably 90% of the users," he said, adding that relatively few have progressed to customized workflows, skills files or AI agents.
Badri said those more sophisticated uses should drive much higher token consumption. Software developers are the main power users today, he said, with financial services likely to be the next major group to adopt the tools.
"You want best-in-class intelligence to accelerate productivity, and for that you will pay up," Badri said.
Eisman Sees a Price-War Risk
Eisman agrees demand is real but questions how OpenAI and Anthropic will fare as cheaper alternatives improve.
"You don’t need Mercedes to do every single task," he said.
OpenAI cut Luna pricing by 80% in July, helping drive a roughly tenfold increase in usage, CFO Sarah Friar said.
That raises a complication for Eisman’s warning: lower prices may squeeze model-provider margins while driving more token consumption.
Polymarket traders put the chance of an AI industry downturn by Dec. 31 at 9%. The contract requires at least three major stress events to occur, including a 50% Nvidia drop, an OpenAI or Anthropic bankruptcy, or H100 rental prices falling to $1 or less.
Eisman said a full-blown price war between OpenAI, Anthropic and Chinese models could change the picture.
"If that were to happen, maybe the story would change," he said. "But until then, the story probably continues."
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