Cisco Fuels Tech Rally's Fire

SAN JOSE, Calif. (TheStreet) -- Cisco's(CSCO) ongoing rebound has added fuel to the fire of tech's rally, continuing the run of strong results from fellow heavyweights such as IBM(IBM), Microsoft(MSFT) and Intel(INTC).

Clearly, 2012 is shaping up to be a better year for tech investors than 2011, when Silicon Valley was wrestling with massive uncertainty in Europe and the U.S. public sector. The Nasdaq Composite Index slipped 1.8% last year, while the Dow Jones Industrial Average gained more than 5%. So far this year, however, the Nasdaq has risen 12.4%, easily outpacing the Dow's gain of 5.5%.

Cisco has added fuel to the tech rally's fire.

Enterprise spending, in particular, is bolstering tech earnings, as evidenced by Cisco's strong second-quarter results, released after market close on Wednesday.

"Enterprise spending for the last two or three quarters has been pretty solid for us," Frank Calderoni, the Cisco CFO, said in an interview. Calderoni explained that Cisco grew its enterprise orders 7% year-over-year in the second quarter, while the company's service provider business climbed an impressive 12%, shrugging off the recent weakness noted by rival Juniper(JNPR).

Widely regarded as a barometer for spending on networking gear, Cisco's results point to healthy demand for IT infrastructure. The fact that revenue from the company's switch business, which accounts for almost a third of its total sales, raised 8% year-over-year, should therefore be seen as a positive.

"[This represented the fastest growth] rate in over a year, and a marked improvement from declines of 3% to 9% in recent quarters," noted Sterne Agee analyst Shaw Wu in a note released on Thursday. "The Cisco turnaround story is real and intact."

Reflecting the company's improving fortunes, Cisco's stock has climbed more than 13% in 2012.

This earnings season has seen a surge in bullish sentiment from tech's bellwethers. Microsoft CFO Peter Klein, for example, recently said that enterprise spending is helping the software giant deal with a sagging PC market.

Like Microsoft, IBM also saw enterprise strength, particularly in its software business, where quarterly revenue was up 9% year-over-year. Big Blue has also been reaping the benefits of emerging markets, the company explained during its fourth-quarter conference call.