SAN JOSE, California, August 12, 2026, 16:22 EDT
- Cisco reported quarterly revenue of $17.3 billion, surpassing consensus by 2.8%.
- AI revenue for fiscal 2027 is projected to climb 87.5% to reach $7.5 billion.
- AI accounts for 37% of the expected rise in overall revenue for next year.
Cisco Systems, Inc. NASDAQ:CSCO increased its fiscal 2027 AI revenue forecast to $7.5 billion following a quarterly earnings beat. Shares climbed 3.2% in Wednesday’s regular trading ahead of the announcement.
The new target is more significant than the earnings beat. AI is expected to account for roughly 37% of Cisco’s projected $9.5 billion revenue growth next year.
That means approximately $6.0 billion in growth remains for the rest of Cisco. For non-AI revenue, this would require an increase of about 10% on a comparable base.
| Q4 metric | Reported | Reference | Difference |
|---|---|---|---|
| Revenue | $17.3 billion | $16.83 billion consensus | Rose 2.8% |
| Adjusted EPS | $1.22 | $1.17 consensus | Up 4.3% |
| Adjusted gross margin | 66.3% | 65.5%-66.5% guidance | At upper end |
| Adjusted operating margin | 35.9% | 34%-35% guidance | 90 bps above range |
Revenue for the quarter climbed 18% compared to the same period last year. Adjusted earnings grew 23% to $1.22 per share, coming in five cents higher than the FactSet consensus estimate.
Networking revenue rose by 28%, and security increased by 14%. Product orders were up 35%, or 25% when excluding hyperscaler customers.
Orders for AI infrastructure totaled $4.0 billion in the quarter, lifting the fiscal-year sum to $9.3 billion and narrowly surpassing Cisco’s $9.0 billion goal.
| AI bridge | Amount | Investor read-through |
|---|---|---|
| Q4 FY2026 hyperscaler orders | $4.0 billion | Accounts for 43% of the full-year order total |
| FY2026 hyperscaler orders | $9.3 billion | Exceeds target by $0.3 billion |
| FY2026 AI revenue | About $4.0 billion | Marks start of conversion period |
| FY2027 AI revenue target | $7.5 billion | Represents 87.5% year-on-year increase |
| FY2027 revenue / FY2026 orders | 80.6% | Useful as a conversion indicator; not precise |
The blend comes with a price. Adjusted gross margin dropped by 210 basis points to 66.3%, while adjusted operating margin increased by 160 basis points to 35.9%.
Reduced expense intensity offset that impact. Adjusted operating expenses rose 5%, significantly less than the 18% increase in revenue.
Chief Executive Chuck Robbins stated that Cisco was “well positioned to support our customers however or wherever they decide to deploy AI.” The firm described the ongoing demand cycle as a networking supercycle. Cisco
| Outlook metric | FY2026 actual | FY2027 midpoint | Implied growth |
|---|---|---|---|
| Revenue | $63.3 billion | $72.8 billion | 15.0% |
| Adjusted EPS | $4.33 | $5.08 | 17.3% |
| AI hyperscaler revenue | Approx. $4.0 billion | $7.5 billion | 87.5% |
Cisco forecast first-quarter revenue between $18.0 billion and $18.2 billion. The adjusted EPS outlook of $1.32-$1.34 signals another double-digit gain.
The broader outlook for fiscal 2027 projects revenue between $72.2 billion and $73.4 billion. Adjusted earnings per share are forecast at $5.05 to $5.11.
| Pre-release rating | Analysts | Percentage of total |
|---|---|---|
| Strong Buy | 13 | 50% |
| Buy | 4 | 15% |
| Hold | 8 | 31% |
| Sell | 1 | 4% |
Options implied a swing of about 7% either way by Friday. While the latest numbers surpassed forecasts, the 60% yearly surge set a higher bar.
Risks: Orders for AI are mainly clustered with major buyers, and timing may vary. Changes in product mix might impact gross margin, and increased competition or reduced enterprise spending could affect conversion rates.
The next step is execution. Cisco needs to convert its $9.3 billion backlog into revenue while maintaining the operating leverage that safeguarded fourth-quarter earnings.
Related articles: NASDAQ:CSCO
