Key Takeaways:
Cisco Systems reported record fiscal fourth-quarter revenue of $17.3 billion, up 18 percent year over year and about 3 percent above consensus, as artificial-intelligence infrastructure orders from hyperscale cloud providers accelerated.
"Another record year for Cisco," Chief Executive Chuck Robbins said, citing secure networking as a differentiator for customers deploying AI workloads.
Adjusted earnings rose 23 percent to $1.22 a share, beating the $1.17 consensus, while adjusted operating income climbed 23 percent to $6.2 billion, a 35.9 percent margin. AI infrastructure orders from hyperscalers reached $4 billion in the quarter, 43 percent of the $9.3 billion booked across fiscal 2026. Product orders rose 35 percent year over year, and 25 percent excluding hyperscalers, while networking revenue grew 28 percent.
Shares jumped as much as 8 percent in after-hours trading before reversing to fall more than 6 percent, as investors weighed the durability of AI orders against a valuation near 30 times forward earnings, above the S&P 500's 22 times. The stock has climbed about 60 percent this year to within 5 percent of its all-time high of $130.
Cisco guided fiscal 2027 revenue of $72.2 billion to $73.4 billion, roughly 6 percent above analyst estimates, with adjusted earnings of $5.05 to $5.11 a share. AI infrastructure revenue is expected to reach about $7.5 billion in fiscal 2027, nearly double the roughly $4 billion booked in fiscal 2026. For the current quarter, the company forecast revenue of $18.0 billion to $18.2 billion and adjusted earnings of $1.32 to $1.34 a share, both above consensus.
Non-GAAP gross margin narrowed to 66.3 percent from 68.4 percent a year earlier on a product mix shift toward thinner-margin AI infrastructure sales. Cisco flagged tariff exposure in its fiscal 2027 outlook and is running a restructuring announced May 13 that cuts about 4,000 jobs, roughly 5 percent of its workforce, to shift investment toward AI and related growth areas. The company returned $2.9 billion to shareholders in the fiscal third quarter through dividends and buybacks, and held $16.6 billion in cash.
The guidance raise signals management expects AI demand to keep accelerating, extending a fifth straight quarter of earnings beats. Investors will watch the fiscal first-quarter call for updated segment margins and any further increase to the AI order book.
This article is for informational purposes only and does not constitute investment advice.
