Key Takeaways
- Cisco delivered Q4 adjusted EPS of $1.22 on $17.3 billion revenue, surpassing consensus expectations of $1.17 EPS and $16.8 billion revenue
- The networking division generated $9.79 billion, marking a 28% year-over-year surge and exceeding the $9.66 billion analyst forecast
- AI infrastructure orders for the full fiscal year 2026 reached $9.3 billion, beating the company’s upgraded $9 billion projection
- Fiscal 2027 outlook calls for $72.2-$73.4 billion in revenue and $5.05-$5.11 EPS, significantly above Wall Street forecasts
- CSCO shares declined approximately 4% in extended trading despite the strong performance, as gross margins contracted to 66.3% from 68.4% year-over-year
Cisco Systems delivered fiscal fourth-quarter financial results that exceeded analyst projections across both revenue and earnings metrics, yet shares retreated in after-hours trading sessions.
The networking giant posted adjusted earnings of $1.22 per share alongside $17.3 billion in quarterly revenue. Wall Street consensus had anticipated $1.17 per share on $16.8 billion in sales.
Quarterly revenue climbed 18% compared to the prior-year period. Product revenue specifically soared 24% versus the year-ago quarter.
The company’s networking division served as a primary growth engine, generating $9.79 billion in revenue. This represented a 28% year-over-year expansion and exceeded the $9.66 billion analyst consensus.
During Q4 alone, Cisco secured $4 billion in AI infrastructure orders. This brought the company’s complete fiscal 2026 AI order tally to $9.3 billion, surpassing its previously elevated target of $9 billion.
To put this in perspective, Cisco began the fiscal year projecting $5 billion in AI orders. The company increased this forecast to $9 billion in May, yet managed to exceed even that revised figure.
Overall product orders jumped 35% during the quarter.
Fiscal 2027 Outlook Significantly Exceeds Street Estimates
Looking ahead to fiscal 2027, Cisco projected revenue in the range of $72.2 billion to $73.4 billion. Analyst consensus had been tracking closer to $69.1 billion.
The company’s non-GAAP EPS forecast of $5.05 to $5.11 similarly exceeded the Street’s $4.83 consensus estimate.
Operating cash flow increased 27% year-over-year to $5.4 billion. The networking leader distributed $3.2 billion back to shareholders via $1.7 billion in dividend payments and $1.5 billion in share repurchases.
Market Reaction: Why Shares Declined
Notwithstanding the impressive financial performance across multiple metrics, CSCO shares fell roughly 4% in after-hours trading following an initial positive reaction.
Margin compression appears to be the primary concern. Total gross margin registered at 66.3%, representing a decline from 68.4% in the comparable quarter last year. Escalating costs associated with AI hardware components such as memory chips may be contributing to this pressure.
Additionally, CSCO shares had already appreciated more than 61% year-to-date prior to the earnings announcement, potentially creating elevated investor expectations.
CEO Chuck Robbins commented: “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.”
During the reported period, Cisco finalized its acquisitions of Galileo Technologies and Astrix Securities, broadening its capabilities in network security and automated observability solutions.
CSCO stock has climbed more than 50% year-to-date at the time of this report.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
