Cisco Q4 Earnings Beat Forecasts with $9.3 Billion in AI Infrastructure Orders, Stock Drops on Margins

Cisco forecasts annual revenue above estimates on sustained AI spending

Aug 12 (Reuters) - Cisco Systems (CSCO.O), opens new tab forecast fiscal 2027 revenue above Wall Street expectations on Wednesday, signaling confidence that strong demand for its AI networking gear will continue to power growth. Shares of the San Jose, California-based company rose 3% in ⁠extended trading. They have climbed over 56% so far this year. Cisco has benefited from hyperscale cloud providers and enterprises building out their infrastructure to handle the complex demands of generative AI. The networking giant received AI infrastructure orders ⁠from hyperscalers worth $4 billion for the fourth quarter ended July 25, bringing the total to $9.3 billion. It expects annual revenue to ⁠be between $72.2 billion and $73.4 billion, compared with analysts' average estimate of $68.69 billion, according to ⁠data compiled by LSEG. Cisco posted revenue of $17.25 billion for the fourth ⁠quarter ended July 25, beating estimates of $16.82 billion. Reporting by Juby Babu in Mexico City; Editing by Shinjini Ganguli Our Standards: The Thomson Reuters Trust Principles., opens new tab

Cisco Q4 2026 earnings beat sends stock lower after hours

Cisco $CSCO reported fourth-quarter revenue of $17.25 billion on Wednesday, beating analyst expectations and posting record annual results, but Cisco stock fell in after-hours trading. The quarter's adjusted earnings per share of $1.22 topped the consensus estimate of $1.17, while revenue of $17.25 billion exceeded the $16.82 billion Wall Street had anticipated, according to CNBC. Revenue grew 18% compared with $14.7 billion in the same period last year, and GAAP net income jumped 51% to $3.9 billion, or 97 cents per share. For the full fiscal year 2026, revenue reached $63.3 billion, up 12%, with GAAP net income of $13.3 billion. A standout of the quarter was AI-related demand from hyperscalers -- the major cloud and internet platforms fueling infrastructure buildouts. That cohort placed $4 billion in orders during the fourth quarter alone, pushing their fiscal year 2026 total to $9.3 billion, the company said. Those customers generated about $4 billion in revenue for Cisco in fiscal 2026, a figure the company projects will climb to $7.5 billion by fiscal 2027. Total product orders rose 35% year over year in the quarter, with networking product orders up 40%, marking the eighth straight quarter of double-digit growth in that category, the company said. "We delivered a very strong close to fiscal 2026, marking another record year for Cisco," said Chuck Robbins, chair and CEO of Cisco, in a statement. "With the breadth and depth of our portfolio and our competitive differentiation in secure networking, Cisco is well positioned to support our customers however or wherever they decide to deploy AI." Guidance for the current quarter and full fiscal year came in well above analyst estimates. For the fiscal first quarter of 2027, Cisco put its revenue target at $18 billion to $18.2 billion, well ahead of the $16.8 billion analysts had penciled in, according to Benzinga. The company also forecast adjusted EPS of $1.32 to $1.34 for the period, surpassing the $1.16 consensus. Looking further out, Cisco set its full-year fiscal 2027 revenue outlook at $72.2 billion to $73.4 billion, with full-year adjusted EPS expected to land between $5.05 and $5.11, the company said. Cisco also declared a quarterly dividend of $0.42 per share, payable October 21, 2026, to stockholders of record as of October 2, 2026. During the quarter, the company returned $3.2 billion to stockholders through share buybacks and dividends. Cash flow from operations was $5.4 billion for the quarter, up 27% year over year. The company ended the period with $15.9 billion in cash, cash equivalents, and investments.

AI infrastructure spending boosts Cisco's earnings and revenue, but its stock declines after-hours

Networking giant Cisco Systems Inc. coasted to a solid earnings and revenue beat and issued strong guidance for the current quarter, but a drop in gross margins seems to have spooked investors, for its stock fell in late trading today. The company reported fourth-quarter earnings before certain costs such as stock compensation of $1.22 per share, easing past the analyst consensus estimate of $1.17 per share. Revenue for the period came to $17.25 billion, up 18% from a year earlier and ahead of Wall Street's $16.82 billion forecast. Net income, meanwhile, was up 51% from the year-ago period to $3.9 billion. Ahead of today's report, Cisco's stock had posted some impressive gains, rising more than 60% during the quarter and by about 8% so far this month. Investors have been encouraged by the idea that the company is starting to benefit more from the artificial intelligence boom. The company's latest results suggest that is exactly what is happening. Cisco's biggest business, the networking segment, which covers equipment used in AI data centers, saw its revenue grow significantly thanks to increased sales of that gear. All told, the unit generated revenue of $9.79 billion, up 28% from a year ago and surpassing the Street's forecast of $9.66 billion. Hyperscalers, or the massive data center operators that are driving much of the spending on AI infrastructure, placed orders worth $4 billion during the quarter, bringing the total spent on such equipment to $9.3 billion throughout Cisco's fiscal year. Chief Executive Chuck Robbins (pictured) hailed the company's strong finish to fiscal 2026, saying the growth is a testament to both its innovation and execution. "With the breadth and depth of our portfolio and our competitive differentiation in secure networking, Cisco is well positioned to support our customers however or wherever they decide to deploy AI," he insisted. Cisco also offered a bullish forecast for the current quarter, saying that it's targeting total revenue of $18 billion to $18.2 billion, surpassing the Street's consensus estimate of $16.8 billion. The company also issued full year guidance for fiscal 2027, saying it's looking at earnings of $5.05 to $5.11 per share on total sales of $72.2 billion to $73.4 billion, ahead of the Street's forecast of $4.83 per share in earrings and $69.1 billion in sales. Despite the solid earnings and revenue beat and optimistic outlook, Cisco's stock surprisingly fell more than 4% in after-hours trading. However, it's still up more than 60% in the year to date. It's likely that investors were put off by a sharp drop in Cisco's gross margin, which fell to 66.3% from 68.4% in the same period one year ago. Most likely, the drop can be explained by the rising costs of the components used in Cisco's networking hardware, such as memory chips.

Cisco Q4 Earnings: CEO Robbins Says AI, Security Spending Driving Network Refreshes

'Most of our enterprise customers today recognize we are in the midst of probably the fastest-moving technology transition that we've ever seen,' says Cisco Chair and CEO Chuck Robbins. Cisco Systems Chair and CEO Chuck Robbins dismissed concerns that the networking vendor is at the peak of what he calls a "super cycle" of growth, citing enduring long-term opportunities from artificial intelligence infrastructure, security updates spurred by Anthropic's Mythos model and the pending quantum computing era. "Those are all drivers of what we've been talking about relative to just an overarching campus refresh where, for the first time ever, we've had our campus networking, our switching, routing, as well as wireless and everything -- all of those are going through a refresh at the same time," Robbins (pictured) said on the San Jose, Calif.-based vendor's latest quarterly earnings call Wednesday. The vendor covered results for the fourth quarter of its 2026 fiscal year, covering the three months ended July 25, as well as the entire fiscal year. [RELATED: AMD Advancing AI 2026: Top News On AI Chips, CPUs, Robotics] Cisco CEO: AI, Security, Quantum Drive Refresh Cycle As an example of Mythos' impact on the channel overall, Juan Orlandini, CTO of Chandler, Ariz.-based solution provider giant Insight Enterprises, told CRN in a recent interview that the AI model has put pressure on customers to improve security postures. "In the past, it was OK to sweat a server past its end of life and just assume that, 'Hey, I'm going to keep running that server until it dies and then I'll just buy a new one,'" Orlandini said. "The problem is that when that server is no longer being supported by the OEM that server's firmware is not being updated by the OEM and the firmware is a vector for attacks now." Insight has been working with customers to navigate where to upgrade equipment to prevent increased attack vectors, the CTO said. "We have got to worry about this across the whole spectrum, and our customers are seeing the pressure across the entire spectrum of compute," he said. Anthropic's Mythos Influences Enterprise Security Spending Robbins told analysts on the call that "customers are reprioritizing spending within existing budgets and increasingly viewing readiness spending around AI, Mythos and quantum-related vulnerabilities as 'not optional.'" "That's creating a shift of dollars from other areas in the organizations to IT to actually do that work," Robbins said. Although Cisco hasn't seen "a massive amount of impact" from Anthropic's Mythos yet, a Mythos-influenced pipeline is growing as customers engage in early conversations around infrastructure assessments, last-day-of-support deadlines, getting rid of equipment past those deadlines and the ability to patch various parts of the IT estate. In the name of improved cybersecurity, customers are refreshing their networks, Robbins said. The spending "is really showing up as a network refresh, but is probably underneath viewed as a cybersecurity spend," the CEO said. A July report from KeyBanc said that one-fifth of surveyed CIOs and one-third of VARs reported increased security spend due to concerns around Mythos, with that spend focused on services and labor as opposed to software. For organizations that did spend more on software, the spend concentrated on penetration testing, frontier models and patching, for example, according to the investment firm. "Most of our enterprise customers today recognize we are in the midst of probably the fastest-moving technology transition that we've ever seen," Robbins said. "There's a combination of ensuring that they're moving with enough caution that they actually get this right but not moving too slow to where their competition actually creates a competitive differentiation that that puts them at a disadvantage." "They all have a real recognition that if they were to pause, they put the companies that they run at risk," he continued. Cisco Sees Growth In Infrastructure Assessments A potential signal of growing demand for Cisco's platform approach and equipment assessment capabilities came in a white-glove program for Cisco's Cloud Control unified operations platform for managing, monitoring and defending enterprise IT infrastructure, which now has about 4,500 customers signed up, Robbins said. The Cisco IQ assessment platform has more than 8,600 customers. Assessments give Cisco -- and its solution providers -- a displacement opportunity for competitor equipment that is past last day of support, Robbins said. Robbins Feels Well-Positioned For AI Boom Cisco is well-positioned for the AI era with a full-stack portfolio spanning systems, silicon, optics, security and observability, the CEO said. Robbins said that the network traffic related to AI-based scale-across compared with traditional Data Center Interconnect is roughly 14 times larger. Cisco is uniquely positioned for the trend thanks in part to its P200 deep-buffer routing and switching chip, the CEO said. Its Acacia optics business had another billion-dollar quarter, with Cisco landing its first design win in optical networking. Cisco is also starting to deploy multi-rail systems in its platforms as well. "If you look at the opportunity for scale-across, it's massive," Robbins said. "We believe that we're very well-positioned to take advantage of that as we go forward." AI users leveraging cloud-based models are good news for Cisco, and those users turning to open-weight models and on-premises models is also a Cisco win "because it means they will invest in more enterprise private data center networking, which we've seen the last two quarters," Robbins said. The third fiscal quarter saw more than 40 percent growth in that business. The fourth quarter saw more than 35 percent. Running thousands of agents across infrastructure and edge deployments also creates opportunities for networking performance and latency upgrades, Robbins said. In a signal of AI growth from the quarter, Cisco reported that in its enterprise business, Nexus network switch orders tagged for AI deployments grew more than 85 percent sequentially. Cisco's adoption of AI internally led to 145,000 support cases resolved in the fiscal year with zero human intervention. The vendor's Circuit on-premises proprietary AI assistant supported more than 75 million prompts in the latest quarter. Navigating Supply Chain, Component Cost Pressures Unlike some technology vendors experiencing supply chain issues with various data center components, Cisco doesn't "have any significant lead time issues that we're seeing," CFO Mark Patterson said. He pointed to Cisco joining a $2.5 billion funding raise for Taiwanese memory chip maker Nanya Technology earlier this year as well as a direct relationship with Taiwan Semiconductor Manufacturing Co. (TSMC) for silicon supply as efforts that have helped with supply. "We've got adequate supply to meet not only the guide for FY27, but if demand actually strengthens and goes above that, we feel like we're in really good shape to meet that as well," the CFO said. Although the increased demand in hardware will put pressure on Cisco's margins, Robbins stood by pursuing those deals because "it allows us to take, even in some cases, a lower- margin business from a gross margin perspective, that actually turns out to be highly profitable because we don't have to add incremental expenses to go gather that business." "These are strategic decisions we're making about business to pursue, and we feel really good about the profitability impact of those businesses," the CEO said. Patterson attributed about 5 points of top-line revenue growth in the quarter to price increases, which impacted the first half of the year more than the second. Cisco forecasts another 4 to 5 points of impact in the new fiscal year. "Price increases are certainly a last resort for us," Patterson said. "We're doing everything we can to secure the right supply at the right prices and build up strategic inventory where needed and advance purchase commitments." Commenting on Cisco's work to achieve greater efficiencies in memory use in light of tight supply and growing costs, the CFO said that Cisco has more than 30 different programs aimed at improving efficiency in the space. Security Business Gains Momentum Cisco's executives on the call reported a variety of growth measures in the vendor's security business. Security grew 14 percent year over year in the quarter. The vendor expects the security business to exit Fiscal Year 2026 with full-year growth in overall security in the low single digits. In the core Cisco security portfolio during the quarter, more than 1,500 customers purchased new products, including Secure Access and Hypershield. Some large on-premises Splunk deals during the quarter helped the overall security business' growth, Patterson told analysts on the call. Splunk added more than 280 new logos to its customer base and secured the highest number of competitive wins in any quarter in Fiscal Year 2026. Cisco exceeded its target of 1,000 new logos for the year, Robbins said. Cisco's firewall business saw a second consecutive quarter of 30 percent growth, Robbins added. "We think that'll just continue to get better next year," the CEO said. Cisco Q4 Results: Revenue, AI Infrastructure, Regional Performance The vendor reported double-digit growth in its fourth quarter and fiscal year, exceeding the high end of its previously given guidance ranges. Product orders for the quarter increased 35 percent year on year. Excluding hyperscalers, the growth was 25 percent. Cisco reported double-digit growth in every geography and customer market. Revenue from the Americas grew 18 percent year on year, according to Cisco. The Europe, Middle East and Africa (EMEA) region grew 19 percent. The Asia-Pacific, Japan and China (APJC) region grew 14 percent. In customer markets, service providers and cloud led with 95 percent growth in the quarter. Cisco saw public sector up 30 percent. Enterprise grew 21 percent. Cisco's networking product orders grew 40 percent year on year in the quarter, an eighth consecutive quarter of double-digit growth, according to the vendor. The networking business saw triple-digit growth in service provider routing and Acacia optics and double-digit growth in data center switching, compute, campus switching, wireless, enterprise routing and Industrial IoT products. Orders for the Industrial IoT portfolio grew double digits for the ninth consecutive quarter, with acceleration in the latest quarter. More than half of Cisco customers purchased both campus and data center networking products. And during the quarter, overall data center networking orders grew more than 35 percent year over year. Campus networking product orders grew 20 percent year over year, according to the vendor. The vendor saw $4 billion in hyperscaler AI infrastructure orders in the quarter. The fiscal year total came in at $9.3 billion. The business delivered about $4 billion in revenue in the fiscal year. Cisco reported $17.3 billion in revenue for the quarter, up 18 percent year on year. Its operating margin using GAAP was 24.7 percent. Without GAAP, the margin came in at 35.9 percent. Product revenue increased 24 percent year on year during the quarter to $13.5 billion. Networking grew 28 percent, with triple-digit growth in AI infrastructure and double-digit growth in data center switching. The collaboration business, which includes Webex, increased 12 percent, the best quarterly performance in seven years. Video devices grew 40 percent year over year. And the observability business increased 6 percent. Services revenue was flat year on year at $3.8 billion, according to Cisco. Net income was $3.9 billion for the quarter using GAAP and $4.9 billion without GAAP. GAAP operating income was $4.3 billion, up 38 percent year on year. The GAAP operating margin was 24.7 percent. Non-GAAP operating income was $6.2 billion, up 23 percent year on year. For the fiscal year, Cisco brought in $63.3 billion in revenue, up 12 percent year on year. The vendor reported a similar operating margin for the year to the quarterly one. The GAAP operating income for the year was $15.4 billion, up 31 percent year on year. Non-GAAP operating income came in at $22 billion, up 13 percent. The vendor achieved its highest productivity metrics in 30 years measured by revenue, non-GAAP operating margin and earnings per employee, according to Cisco. Net income for the fiscal year using GAAP was $13.3 billion, up 30 percent year on year. Without GAAP, net income was $17.2 billion, up 13 percent. Cisco generated $14.2 billion in cash flow from operating activities in fiscal 2026, about the same as the prior year. Cisco has a remaining performance obligation (RPO) of $46.7 billion, up 7 percent year on year in total. Product RPO grew 9 percent. Services RPO grew 6 percent. Total annual recurring revenue at the end of the quarter was $32.1 billion, up 3 percent year on year. Product ARR grew 5 percent. Total software revenue was $6.2 billion for the quarter, up 11 percent year on year. Cisco Forecasts AI Infrastructure Growth In Fiscal 2027 Cisco executives expect $7.5 billion in revenue from the hyperscaler AI infrastructure business in the 2027 fiscal year, according to the vendor. The vendor expects $18 billion to $18.2 billion in revenue for the first fiscal quarter. Cisco expects $72.2 billion to $73.4 billion in revenue for the 2027 fiscal year. Patterson told analysts on the call that he expects the core business to grow about 10 percent year on year, "significantly faster" than numbers Cisco shared at a prior investor day. He warned that, overall, tough comparables to the prior fiscal year prompted a more conservative outlook in parts of fiscal year 2027. He sees the security and observability businesses going from low-single-digit growth in full-year fiscal 2026 to high-single-digit growth in full-year fiscal 2027. The services business should turn positive in full-year fiscal 2027, with gradual improvement through the year hitting a low-single-digit growth range. Patterson put security growth in the mid to high single digits in the first fiscal quarter and improving through the year. Cisco's stock traded at about $119 a share Wednesday after market close, down about 4 percent. Steven Burke contributed to this story.

Cisco Stock Is Falling Thursday: What's Going On? - Cisco Systems (NASDAQ:CSCO)

Cisco Says AI Boom Is Forcing Companies to Upgrade Networks -- 'It's Just Not Optional' Revenue rose to $17.25 billion, topping the $16.82 billion analyst estimate. Adjusted earnings of $1.22 per share beat the $1.17 consensus estimate. Management described the current environment as the early stages of a multi-year networking and AI infrastructure supercycle. The company cited accelerating AI adoption, hyperscaler investment, enterprise AI deployments, cybersecurity demand and high-performance networking. During the earnings call, CEO Chuck Robbins said companies increasingly view AI readiness, cybersecurity and infrastructure upgrades as essential spending. Customers are shifting money from other budgets into IT because falling behind could put their businesses at a competitive disadvantage. Robbins said the spending is becoming similar to cybersecurity investments: "It's just not optional." Cisco said the trend is helping fuel what it calls a multiyear networking "super cycle." Cisco Q4 Earnings Snapshot Cisco's product revenue rose 24% year over year to $13.5 billion, while services revenue was flat at $3.8 billion. Total remaining performance obligations, or RPO, increased 7% to $46.7 billion. Product RPO rose 9%, while annual recurring revenue reached $32.1 billion, up 3%. Subscription revenue represented 48% of quarterly revenue. Software revenue increased 11% to $6.2 billion. Adjusted gross margin was 66.3%, while adjusted operating margin was 35.9%. Operating cash flow climbed 27% to $5.4 billion. Cisco ended the quarter with $15.9 billion in cash, cash equivalents and investments. The company returned $3.2 billion to shareholders, including $1.7 billion in dividends and $1.5 billion in share repurchases. Cisco had $8.1 billion remaining under its stock repurchase authorization. AI And Networking Orders Surge Product orders jumped 35% year over year in the fourth quarter. Orders increased 44% in the Americas, 25% in EMEA and 19% in APJC. Hyperscaler orders grew at a triple-digit rate, while service provider and cloud orders surged 95%. Enterprise orders rose 21%, and public-sector orders increased 30%. Networking orders climbed 40%, marking the eighth consecutive quarter of double-digit growth. Networking revenue increased 28%. Cisco secured $4 billion in hyperscaler AI infrastructure orders during the quarter. That brought fiscal 2026 orders to $9.3 billion, about 4.5 times the fiscal 2025 level. Acacia generated more than $1 billion in orders. Cisco also shipped more than 850 400G and over 75 800G coherent pluggable optics. The company added three hyperscaler design wins and expects several more AI design wins over the next six months across its Silicon One platforms and optics. AI infrastructure orders from neo-cloud, sovereign-cloud and enterprise customers exceeded $400 million in the quarter and topped $1 billion for fiscal 2026. Enterprise AI demand also strengthened. AI-tagged Nexus switch orders increased more than 85% sequentially, while data-center networking orders rose more than 35%. Wi-Fi 7 represented more than half of wireless orders. Security And AI Adoption Gain Momentum Security orders grew by double digits. More than 1,500 customers adopted Cisco's new security products during the quarter, bringing cumulative net-new customers to more than 6,400. Firewall orders increased more than 30%. Splunk added more than 280 new logos during the quarter and surpassed 1,000 for fiscal 2026. Collaboration recorded its strongest quarter in seven years, with video-device revenue rising 40%. Cisco also resolved 145,000 customer support cases entirely through AI during fiscal 2026. Its Circuit AI assistant processed more than 75 million prompts in the fourth quarter. Nearly 4,500 enterprises have signed up for Cisco Cloud Control since its June launch. Resilient Infrastructure Services powered by Cisco IQ now serve more than 8,600 customers. Cisco Forecast Tops Wall Street Estimates Cisco expects fiscal first-quarter revenue of $18 billion to $18.2 billion, well above the $16.8 billion analyst estimate. The company forecast adjusted earnings of $1.32 to $1.34 per share, compared with the $1.16 consensus estimate. For fiscal 2027, Cisco expects revenue of $72.2 billion to $73.4 billion, versus the $68.69 billion estimate. Adjusted earnings are expected to range from $5.05 to $5.11 per share, above the $4.80 estimate. Cisco expects hyperscaler AI infrastructure revenue to reach $7.5 billion in fiscal 2027, nearly doubling from $3.8 billion in fiscal 2026. CSCO Price Action: Cisco Systems shares were down 5.72% at $116.80 during premarket trading on Thursday, according to Benzinga Pro data. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Rosenblatt raises Cisco stock price target on strong AI demand By Investing.com

Investing.com - Rosenblatt raised its price target on Cisco Systems Inc. (NASDAQ:CSCO) to $165 from $150 while maintaining a Buy rating on the stock. The shares currently trade at $123.88, representing a 33% upside to the new target. The firm cited strong fourth-quarter fiscal 2026 results across products, end-markets, and geographies. Total product orders increased 35% year-over-year in the fourth quarter, with triple-digit growth in Hyperscale orders and 21% growth in Enterprise orders. Quarterly revenue grew 18% year-over-year. The company's first-quarter fiscal 2027 outlook calls for approximately 22% growth, while full-year fiscal 2027 revenue guidance points to 15% growth.The stock has delivered a 79.6% return over the past year and is trading near its 52-week high of $130.37. According to InvestingPro analysis, Cisco appears overvalued at current levels. Investors can access 16 additional ProTips and comprehensive Pro Research Reports covering Cisco and 1,400+ other US equities on InvestingPro. Hyperscale AI orders reached $4 billion in the fourth quarter of fiscal 2026, bringing the fiscal 2026 total to $9.3 billion. Hyperscale AI revenue is projected to grow to $7.5 billion in fiscal 2027 from $4 billion in fiscal 2026. Gross margins are expected to decline by 200 to 300 basis points in the first half of fiscal 2027 due to a mix shift toward networking hardware. Operating margins of approximately 35% appear secure given operating expense leverage, according to Rosenblatt. In other recent news, Cisco Systems reported its fiscal fourth-quarter earnings, surpassing Wall Street expectations. The company achieved revenue of $17.3 billion and earnings per share of $1.22, both figures exceeding analyst estimates of $16.8 billion and $1.17, respectively. This represents an 18% year-over-year increase in revenue, with notable growth in networking and security segments. Following these results, Evercore ISI reiterated its Outperform rating for Cisco, maintaining a price target of $150. Morgan Stanley also adjusted its outlook on Cisco, raising the price target to $135 from $130, citing increased demand for AI networking and security equipment. These developments come amid Cisco's fiscal 2027 guidance and its efforts to address technical debt. Despite the strong performance, the company's cautious margin outlook was noted by investors. The results highlight Cisco's ability to capitalize on AI-driven demand in the networking sector. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Morgan Stanley raises Cisco stock price target on AI networking demand By Investing.com

Investing.com - Morgan Stanley raised its price target on Cisco Systems Inc. (NASDAQ:CSCO) to $135 from $130 while maintaining an Overweight rating on the shares. The stock has surged nearly 80% over the past year to $123.88, though InvestingPro data suggests the shares may be overvalued at current levels. The firm cited the need to address technical debt as AI traffic from hyperscalers and enterprise customers drives significant investment in networking and security equipment. Core growth excluding hyperscalers is tracking approximately 10%, with roughly 50% coming from pricing, Morgan Stanley said. Hyperscaler AI revenue is expected to reach $7.5 billion in fiscal year 2027, representing nearly 90% year-over-year growth. The firm raised its fiscal year 2027 revenue growth estimates meaningfully. Cisco posted 9.2% revenue growth in the last twelve months, with analysts forecasting 11% growth for fiscal 2026. According to InvestingPro, which offers comprehensive Pro Research Reports on over 1,400 US stocks including Cisco, the company remains profitable with strong returns across multiple timeframes. The elevated hardware component is pressuring gross margins in the near term by approximately 200 basis points. Supply availability is helping Cisco gain share with cloud customers, Morgan Stanley noted. Lower gross margins are partly offset by lower operating expense intensity and stronger operating leverage. In other recent news, Cisco Systems reported its fiscal fourth-quarter results, surpassing Wall Street expectations with revenue reaching $17.3 billion and adjusted earnings per share of $1.22. These figures exceeded the consensus estimates of $16.8 billion in revenue and $1.17 per share in earnings. The company experienced an 18% increase in revenue year-over-year, driven by significant growth in its networking and security sectors. Evercore ISI reiterated its Outperform rating for Cisco, maintaining a price target of $150, in light of the company's fiscal 2027 guidance and AI revenue outlook. Despite the positive earnings report, Cisco's stock experienced a decline in after-hours trading as investors considered the company's cautious margin outlook. Cisco's performance highlights a strong quarter with record revenue, reflecting robust growth across key segments. These developments indicate continued investor interest and analyst confidence in Cisco's future prospects. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Cisco Reports Higher 4Q Profit as AI Orders Roll In

Cisco Systems reported a higher profit in the fiscal fourth quarter as the company continued to receive billions of dollars in orders from artificial-intelligence hyperscalers. The network-equipment company on Wednesday reported a profit of $3.86 billion, or 97 cents a share, in the quarter ended July 25. That compares with a profit of $2.55 billion, or 64 cents a share, a year earlier. Stripping out certain one-time items, adjusted earnings were $1.22 a share, compared with the $1.17 a share analysts were expecting, according to FactSet. Revenue grew to $17.25 billion, up from $14.67 billion a year prior. Analysts polled by FactSet were expecting $16.84 billion. Product revenue rose 24% year over year, while services revenue was flat. The company said it took in $4 billion worth of AI infrastructure orders from hyperscalers in the fourth quarter, bringing its total for the fiscal year to $9.3 billion. For fiscal year 2027, the company guided for adjusted earnings of between $5.05 and $5.11 a share, on revenue between $72.2 billion and $73.4 billion. Analysts currently expect full-year adjusted earnings of $4.83 a share on $69.12 billion in revenue. For the current first quarter, Cisco projected adjusted earnings per share in a range of $1.32 to $1.34, with revenue between $18 billion and $18.2 billion. Analysts are expecting $1.16 a share in adjusted earnings with $16.83 billion in revenue. Cisco in May said it plans to cut fewer than 5% of its workforce, representing thousands of employees, to put more resources toward AI. It said the restructuring was expected to cost up to $1 billion.

Cisco shares dip as solid AI-driven outlook faces lofty expectations By Investing.com

Investing.com - Cisco Systems forecast fiscal 2027 revenue and profit above Wall Street estimates on Wednesday, betting that surging demand for networking equipment and artificial intelligence infrastructure will sustain growth into the new year. But the company's stock dropped by more than 5% in premarket U.S. trading on Thursday, as analysts noted that the returns, while robust, faced sky-high Wall Street forecasts. Cisco's stock has surged by more than 60% so far this year, reflecting the benefit from runaway demand for the gear needed to underpin cutting-edge AI systems. "FY27 outlook implies core business growth of 10% which is impressive, but there was a high bar for results as valuation was extended heading into earnings and FQ4 AI results were largely in-line with expectations," analysts at Barclays said in a note. They added that the outlook "implies lower product gross margin, which we think may be due to AI dilution." Still, the guidance underscored the strength of demand from hyperscale customers, which has added momentum to its core networking business. Cisco expects first-quarter adjusted earnings of $1.32 to $1.34 per share, compared with analysts' average estimate of $1.14, while revenue is forecast at $18 billion to $18.2 billion, above the $16.66 billion consensus. For fiscal 2027, Cisco expects adjusted earnings of $5.05 to $5.11 per share and revenue of $72.2 billion to $73.4 billion, both comfortably ahead of analysts' estimates of $4.28 and $62.91 billion, respectively. Adjusted fourth-quarter earnings came in at $1.22 per share, beating estimates of $1.17. Revenue rose 18% from a year earlier to $17.3 billion, topping the $16.82 billion consensus. Cisco said total product orders rose 35% year over year in the quarter, while networking product orders jumped 40%, marking the eighth consecutive quarter of double-digit growth. Product revenue increased 24%, led by a 28% rise in networking revenue. Demand for AI infrastructure from hyperscale customers also accelerated. Cisco booked $4 billion of AI infrastructure orders in the fourth quarter, taking total orders for fiscal 2026 to $9.3 billion. The company generated about $4 billion in AI infrastructure revenue in fiscal 2026 and expects that figure to reach $7.5 billion in fiscal 2027. For the full fiscal 2026 year, revenue rose 12% to $63.3 billion, while unadjusted net income increased 30% to $13.3 billion. Cisco also returned $3.2 billion to shareholders through dividends and share repurchases during the quarter and declared a quarterly dividend of $0.42 per share.

Cisco slips 2% despite results supported by AI and networking

The US specialist in networking equipment, cybersecurity and data center infrastructure posted $17.25bn in revenue in its fiscal fourth quarter, up 18% year on year, versus $16.84bn expected. Adjusted earnings per share came in at $1.22, compared with the $1.17 anticipated by consensus. The increase remains largely driven by networking, where sales rose 28%, but it is broadening as cybersecurity gained 14% and collaboration solutions 12%. Cisco also booked $4bn in AI-related infrastructure orders from hyperscalers in the quarter alone, bringing the fiscal-year total to $9.3bn. The group now expects about $7.5bn in revenue from these infrastructures in 2027, versus about $4bn in 2026. This momentum comes in a favorable environment for data center infrastructure suppliers, as major technology groups continue to step up spending to support the development of AI. Goldman Sachs recently estimated that global AI-related capital spending should exceed $1,000bn in 2026, an environment Cisco is seeking to capture a growing share of, thanks to its exposure to hyperscalers and the refresh cycle in network infrastructure. The group's product orders rose 35% year on year in the fiscal fourth quarter. For fiscal 2027, the group is targeting revenue of between $72.2bn and $73.4bn and adjusted earnings per share of $5.05 to $5.11. Chuck Robbins, Cisco's chief executive, believes the breadth of the group's portfolio and its positioning in secure networking allow it to support customers across their different approaches to deploying AI.

Cisco Q4 FY2026 slides: AI orders surge 4.5x, networking supercycle By Investing.com

Cisco Systems (NASDAQ:CSCO) presented its fiscal fourth quarter 2026 results on August 12, 2026, delivering record quarterly revenue and earnings that exceeded guidance while highlighting explosive growth in AI infrastructure orders. The networking equipment giant reported revenue of $17.3 billion, up 18% year-over-year, and non-GAAP earnings per share of $1.22, up 23% from the prior year period. Despite beating Wall Street estimates on both metrics, shares fell 4.44% in after-hours trading to $118.38 from the regular session close of $123.95, as investors weighed cautious gross margin guidance against the company's strong performance. The stock had risen 2.92% during regular trading and sits 77% above its 52-week low of $65.75. The presentation emphasized three major themes: significant AI infrastructure momentum with hyperscaler orders reaching $9.3 billion for the full fiscal year, a multi-year networking supercycle driven by campus refresh and data center switching demand, and strong financial performance with the highest employee productivity metrics in 30 years. Executive Summary As outlined in the company's key takeaways, fiscal 2026 marked a transformational year for Cisco across multiple dimensions. The presentation highlighted that both revenue and earnings per share exceeded the high end of guidance ranges, while the company guided for 15% revenue growth and 17% EPS growth in fiscal 2027. The company emphasized three interconnected growth drivers: AI infrastructure orders from hyperscalers grew approximately 4.5 times year-over-year to $9.3 billion in fiscal 2026, with revenue of roughly $4 billion recognized during the year and expectations for $7.5 billion in fiscal 2027. Campus networking technology orders grew more than 15% year-over-year with next-generation portfolio ramping faster than prior product launches, while data center switching orders exceeded 25% year-over-year growth. Management positioned these developments as part of addressing a $100 billion-plus network refresh opportunity, with the company still in the early stages of what it characterized as a multi-year, multi-billion-dollar cycle. AI Infrastructure Momentum The most striking aspect of Cisco's presentation was the dramatic acceleration in AI infrastructure orders from hyperscale customers. As illustrated in the quarterly progression chart, orders climbed from approximately $2 billion in fiscal 2025 to $9.3 billion in fiscal 2026, with the fourth quarter alone accounting for roughly $4 billion. This growth trajectory represents a fundamental shift in Cisco's business mix and positions the company as a critical infrastructure provider for large-scale AI deployments. The presentation noted that these figures exclude orders from neocloud, sovereign, and enterprise AI customers, which added an additional $1.3 billion in fiscal 2026, up approximately 150% year-over-year. The company secured three new hyperscale AI design wins in the fourth quarter: one P200 scale-across design, one G200 scale-out design, and one optical line system. These wins validate Cisco's technology across different AI networking architectures and expand its addressable market within existing and new hyperscale customers. Looking ahead to fiscal 2027, Cisco raised its AI infrastructure revenue expectation to $7.5 billion from hyperscalers, representing a significant increase from the $4 billion recognized in fiscal 2026 and $1 billion in fiscal 2025. This guidance implies continued strong conversion of the substantial order backlog into recognized revenue. Networking Supercycle Underway Cisco's presentation positioned the company at the center of what it termed a "networking supercycle" driven by AI adoption across multiple deployment environments. The strategic overview detailed how the company's comprehensive portfolio enables it to capture demand across data center infrastructure for hyperscalers, neocloud and sovereign clouds, enterprises, and campus-edge infrastructure. The data center infrastructure segment showed particularly strong momentum, with hyperscaler AI infrastructure orders of $9.3 billion in fiscal 2026 and overall data center networking orders growing 25% year-over-year. This growth was driven by triple-digit year-over-year increases in neocloud, sovereign cloud, and enterprise AI orders, totaling $1.3 billion for the fiscal year. A key driver of the networking supercycle is the dramatic increase in network traffic generated by agentic AI workloads. The presentation highlighted research showing that agentic AI interactions create a 450% increase in network traffic compared to traditional chatbot applications, requiring ultra-low latency connectivity and upgraded networks with deep security capabilities. This traffic explosion creates sustained demand for Cisco's networking infrastructure, as companies must upgrade their networks to handle persistent high-bandwidth requirements rather than the sporadic traffic patterns of earlier AI applications. Cisco emphasized its unique positioning to provide the necessary infrastructure given its vertically integrated platform spanning networking, security, observability, silicon, optics, and services. Campus Networking Refresh Cycle Beyond AI infrastructure, Cisco highlighted significant momentum in its campus networking business, which delivered record orders in the fourth quarter with 20% year-over-year growth. The presentation emphasized that the next-generation campus networking portfolio is ramping faster than prior product launches, yet the company remains in the early stages of a multi-year refresh cycle. The campus refresh is being driven by several technology transitions occurring simultaneously. Wi-Fi 7 represented more than 50% of wireless bookings in the fourth quarter, with wireless overall delivering record bookings up more than 25% year-over-year. The transition to Wi-Fi 7 brings bandwidth well above 1 gigabit per second, driving requirements for multi-gigabit ethernet switches. As customers upgrade to Wi-Fi 7, Cisco is seeing increased attachment rates for its multi-gigabit campus switches to enable the latest performance benefits. The industrial IoT portfolio also contributed to campus growth, delivering record orders in the fourth quarter and achieving double-digit growth for nine consecutive quarters, driven primarily by manufacturing and utilities industries. With only 7% of the campus switching install base refreshed as of the end of fiscal 2026, the company sees substantial runway for continued growth in this segment. Silicon One and Optical Systems Strategy Cisco's Silicon One architecture emerged as a critical enabler of the company's AI infrastructure wins and broader networking strategy. The presentation outlined the comprehensive Silicon One family spanning from integrated access (A-Series) through enterprise switching (E-Series) to massive scale data center applications (P-Series and G-Series). The fourth quarter brought two significant Silicon One design wins: one P200-powered system for a major scale-across use case and one G200-powered system for a scale-out application, both with hyperscale customers. Management indicated momentum is ramping with line-of-sight to multiple design wins expected over the next six months across G300, G200, P200, and A100 designs. The company's strategy calls for comprehensive Cisco-wide adoption of the Silicon One architecture for high-performance networking systems for both hyperscale and enterprise customers by fiscal 2029, representing a significant platform consolidation and technology roadmap commitment. Complementing the silicon strategy, Cisco emphasized its leadership in coherent pluggables through its Acacia business and optical systems. The scale-across AI deployments require approximately 14 times the data center interconnect bandwidth of traditional applications, necessitating 12,000 to 32,000 coherent ports compared to 1,000 to 2,000 for baseline connectivity. Acacia exceeded $1 billion in bookings specifically for AI infrastructure in the fourth quarter, demonstrating the critical role of optical connectivity in large-scale AI deployments. The company has shipped over 850,000 units for 400G ports and over 75,000 units for 800G ports, establishing market leadership in coherent pluggables. The technical requirements for AI scale-across deployments are substantial. As illustrated in the company's architecture diagrams, connecting GPU back-end fabrics across distributed data centers requires approximately 14 times the bandwidth of traditional CPU-to-CPU data center interconnect, driving an order-of-magnitude expansion in port requirements. This bandwidth multiplier effect necessitates purpose-built silicon with deep buffering, proactive congestion control, and coherent optics -- all areas where Cisco has invested heavily and gained design wins. The company's ability to provide complete solutions spanning Silicon One P200-powered systems, optical open line systems, and coherent pluggables positions it to capture significant value in scale-across deployments. Quarterly Financial Performance Cisco's fourth quarter fiscal 2026 financial results demonstrated strong execution across multiple metrics. Total revenue reached a record $17.3 billion, representing 18% year-over-year growth and exceeding the high end of the company's guidance range. Product revenue of $13.5 billion grew 24% year-over-year, while services revenue of $3.8 billion was flat compared to the prior year period. Breaking down revenue by category, networking led with $9.8 billion in revenue, up 28% year-over-year, reflecting the strong demand for data center and campus networking products. Security revenue reached $2.2 billion, up 14% year-over-year, while collaboration grew 12% to $1.2 billion. Observability, which includes the Splunk acquisition, contributed $275 million with 6% growth. Geographically, the Americas delivered the strongest performance with revenue of $10.4 billion, up from $8.8 billion in the prior year period. EMEA revenue reached $4.4 billion, while Asia Pacific contributed $2.5 billion. Product orders showed even stronger growth, up 35% year-over-year overall, with the Americas leading at 44% growth, EMEA at 25%, and APJC at 19%. By customer market, service provider and cloud orders surged 95% year-over-year, driven by the hyperscale AI infrastructure wins. Enterprise orders grew 21%, while public sector increased 30%, demonstrating broad-based demand across customer segments. Profitability metrics showed mixed results reflecting the product mix shift. Non-GAAP gross margin of 66.3% declined 210 basis points year-over-year but improved 30 basis points sequentially. The company attributed the year-over-year decline to higher hardware content in the revenue mix, particularly from AI infrastructure shipments. Non-GAAP operating margin of 35.9% improved from 34.3% in the prior year, demonstrating operational leverage despite gross margin pressure. Non-GAAP net income reached a record $4.9 billion, translating to earnings per share of $1.22, up 23% year-over-year. Operating cash flow of $5.4 billion increased 27% from the prior year period, supporting the company's capital return program. For the full fiscal year 2026, Cisco reported revenue of $63.3 billion, up 12% from fiscal 2025, with non-GAAP earnings per share of $4.33, up 14%. The company characterized fiscal 2026 as delivering the highest employee productivity metrics in 30 years for revenue, operating margin, and earnings. Capital Allocation and Balance Sheet Cisco maintained its commitment to returning capital to shareholders throughout fiscal 2026. In the fourth quarter alone, the company returned $3.2 billion to shareholders, representing 63% of free cash flow. This included $1.5 billion in share repurchases and $1.7 billion in dividends. For the full fiscal year, total capital allocation reached $12.7 billion, comprising $6.1 billion in share repurchases and $6.6 billion in dividends. The company repurchased 76 million shares during fiscal 2026 at an average price of $80.26 per share, with approximately $8.1 billion remaining in authorized repurchase capacity as of the end of the fourth quarter. The balance sheet showed key working capital metrics reflecting the growth in business activity. Inventory increased to $5.7 billion from $3.2 billion a year earlier, while inventory purchase commitments rose to $17.2 billion from $7.6 billion, indicating the company's preparation for continued strong demand. Deferred revenue reached $29.8 billion, up from $28.8 billion a year earlier, providing visibility into future revenue recognition. Remaining performance obligations totaled $46.7 billion at quarter end, up 7% year-over-year, with product RPO of $23.4 billion up 9% and services RPO of $23.3 billion up 6%. Annualized recurring revenue reached $32.1 billion, up 3% year-over-year, with product ARR of $17.9 billion up 5% and services ARR of $14.3 billion up 2%. Forward-Looking Guidance Cisco provided guidance for both the first quarter of fiscal 2027 and the full fiscal year, projecting continued strong growth while acknowledging near-term margin pressure from product mix. For the first quarter of fiscal 2027, the company expects revenue of $18.0 billion to $18.2 billion, representing approximately 15% year-over-year growth at the midpoint. Non-GAAP earnings per share guidance of $1.32 to $1.34 for the first quarter implies approximately 18% year-over-year growth at the midpoint. However, the company guided for non-GAAP gross margin of 65% to 66%, down from 66.3% in the fourth quarter of fiscal 2026, reflecting the continued shift toward hardware-intensive AI infrastructure revenue. Non-GAAP operating margin is expected to be 35.5% to 36.5%. For the full fiscal year 2027, Cisco guided for revenue of $72.2 billion to $73.4 billion, representing approximately 15% year-over-year growth at the midpoint of $72.8 billion. Non-GAAP earnings per share guidance of $5.05 to $5.11 implies approximately 17% year-over-year growth at the midpoint. The guidance incorporates several key assumptions, including AI infrastructure revenue from hyperscalers reaching $7.5 billion in fiscal 2027, up from approximately $4 billion in fiscal 2026. Management indicated that 4 to 5 percentage points of revenue growth would come from price increases, particularly in products with higher memory content. The company expects operating margin to hold near 35%, which it characterized as a high-water mark, and indicated that supply should be sufficient to meet guidance with no major lead-time issues expected. Market Reaction and Investor Considerations Despite delivering record results that exceeded guidance and analyst estimates, Cisco's shares declined 4.44% in after-hours trading following the presentation. The market reaction appeared to focus on the near-term gross margin guidance of 65% to 66% for the first quarter of fiscal 2027, down from 66.3% in the fourth quarter and 68.4% a year earlier. According to the earnings call transcript, Chief Financial Officer Mark Patterson addressed this concern directly, stating: "The thing to really understand is that it indicates the profitable scale of the strategic opportunities that we are pursuing, particularly with the hyperscalers." Management emphasized that the margin pressure reflects product mix rather than weak demand or competitive pricing pressure, as the company ships more networking equipment during the AI buildout phase. The stock's decline from $123.95 to $118.38 in after-hours trading represented a retreat from near the upper end of its 52-week range of $65.75 to $130.37. At the regular session close, shares had gained 77% over the prior year, potentially leaving little room for any perceived disappointment in the guidance despite the strong absolute growth rates projected. Analysts during the Q&A session questioned the conservatism of the company's AI revenue conversion, with the $7.5 billion fiscal 2027 AI revenue guide appearing cautious relative to the $9.3 billion order base. Management indicated that the revenue outlook is shaped by the timing of AI shipments and tougher year-over-year comparisons as the business scales. The presentation's emphasis on early-stage opportunities -- with only 7% of the campus switching install base refreshed and multiple Silicon One design wins expected over the next six months -- suggests substantial growth potential beyond the fiscal 2027 guidance period, though investors appeared focused on the near-term margin trajectory in their immediate reaction. Full presentation: This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Cisco forecasts annual revenue above estimates on sustained AI spending

Aug 12 (Reuters) - Cisco Systems forecast fiscal 2027 revenue above Wall Street expectations on Wednesday, signaling confidence that strong demand for its AI networking gear will continue to power growth. Shares of the San Jose, California-based company rose 3% in extended trading. They have climbed over 56% so far this year. Cisco has benefited from hyperscale cloud providers and enterprises building out their infrastructure to handle the complex demands of generative AI. The networking giant received AI infrastructure orders from hyperscalers worth $4 billion for the fourth quarter ended July 25, bringing the total to $9.3 billion. It expects annual revenue to be between $72.2 billion and $73.4 billion, compared with analysts' average estimate of $68.69 billion, according to data compiled by LSEG. Cisco posted revenue of $17.25 billion for the fourth quarter ended July 25, beating estimates of $16.82 billion. (Reporting by Juby Babu in Mexico City; Editing by Shinjini Ganguli)