The deal, announced Thursday, beefs up Cisco's software business and marks a major push into the rising use of artificial intelligence.

It will also help reduce Cisco's reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a slowdown in demand.

Cisco already has a data-security partnership with Splunk, whose more than 15,000 customers include many prominent companies such as Coca-Cola, Intel and Porsche.

After a surge in revenue growth last year, Splunk has grappled with an industry-wide slowdown in demand wrought by rising interest rates and sticky inflation.

According to the Wall Street Journal, Cisco tried buying Splunk in 2022 for more than $20 billion, but that fell apart.

The deal is expected to close by the end of the third quarter of 2024, subject to regulatory approvals.

Shares of Cisco dipped roughly 4% in Thursday morning trading, while Splunk's shares soared 25% on the news.