Cisco, the networking behemoth, might have been late to the initial cloud computing party, but it’s certainly aiming to make up for it. In a recent earnings conference call, CEO Chuck Robbins divulged that the company has already raked in a cool $500 million from selling equipment to the leading cloud computing giants. The reason? These big players, termed “hyperscalers” in the tech lingo, are experimenting with Ethernet for their AI needs.

Historically, data centers have been reliant on Infiniband, a high-speed networking technology. But ever since Nvidia sealed the deal on acquiring Mellanox Technologies in 2019 for $6.9 billion, they’ve practically monopolized that market. This shift led a coalition of tech heavyweights – including AMD, Intel, and Microsoft, to name a few – to form the Ultra Ethernet Consortium. Their goal? Double down on the current 400-gigabit Ethernet speeds and enhance its capabilities to better serve AI’s growing demands.

While $500 million might appear as a drop in the ocean for a company like Cisco, which just announced a staggering $57 billion in sales for FY 2023, Robbins is setting his sights on the bigger picture. He’s betting on the AI cloud market to be three or even four times larger than the original cloud market. Robbins candidly admitted, “We missed the original cloud build-out,” nodding to the fact that giants like Google and Facebook often crafted their own data center networking tech. But he’s optimistic about Cisco’s position in this emerging AI shift to Ethernet. With 21 use cases already set up across the top six providers, Cisco’s momentum is expected to be unstoppable in the coming years.

However, not everyone is in the same boat of enthusiasm. Morgan Stanley analyst Meta Marshall is adopting a “wait and watch” stance. While she acknowledges the growing investor interest in companies poised for AI infrastructure development, she also highlights that Cisco’s current stake in the hyperscaler market might still be relatively modest. Yet, she does concede that Cisco’s “increasing penetration is a positive.”

The AI wave is undoubtedly coming. And if Robbins’ predictions hold, Cisco is gearing up to ride it, aiming not just to be a participant, but a dominant force in this next phase of technological evolution. For investors and tech enthusiasts, the unfolding narrative of Cisco’s AI journey will be one to watch.