Overview
Since the Report − 6.5%
Revenue grew 18.0% year over year, EPS beat the estimate by 4.0%; the stock fell 4.5% in its first reaction.
- RevenueQ4
- $17.3B
- ▲ 18%
- EPSNon-GAAP
- $1.22
- ▲ 23%
Verdict
BUYCisco closed fiscal 2026 with a record quarter: revenue rose 18% to $17.3 billion, and full-year AI infrastructure orders reached $9.3 billion, topping the raised target. Yet the stock slipped about 4.5% after hours as investors weighed the hyperscaler mix pressuring gross margin and a valuation up 75% over the past year. What matters from here is how much of those orders converts into revenue while protecting profitability.
Close on Report DayAug 12
$120.43▼ 4.5%Report-Day Move
- Market Cap(Today)
- ≈ $444 B
- 1Y Return(At Report)
- + 75%
- P/E(At Today's Price · $3.33 · Trailing 12M)
- 33.8
- Net Margin(Trailing 12M)
- 21.0%
Earnings Summary
In 30 Seconds- Revenue rose 18% year over year to $17.3B; adjusted EPS of $1.22 beat expectations.
- AI infrastructure orders reached $9.3B for the year, with $4B booked in the fourth quarter alone.
- Shares fell about 4.5% after hours as investors focused on a slightly softer gross-margin outlook.
The Numbers
Networking Revenue
$9.79B
▲ 28%
AI Orders (FY26)
$9.3B
Revenue ~$4B
Product Orders
▲ 35%
Ex-hyperscaler 25%
Gross Margin (Non-GAAP)
66.3%
Slight Pressure Ahead
Quarterly Revenue ($ Billion)
14.66
Q4 FY25 · $14.7 B
14.90
Q1 FY26 · $14.9 B · QoQ + 1.6%
15.30
Q2 FY26 · $15.3 B · QoQ + 2.7%
15.80
Q3 FY26 · $15.8 B · QoQ + 3.3%
17.30
Q4 FY26 · $17.3 B · QoQ + 9.5% · YoY + 18.0%
18.0–18.2
Q1 FY27E · 18.0–18.2 · QoQ + 4.6% · YoY + 21.5%
- Q4 FY25
- Q1 FY26
- Q2 FY26
- Q3 FY26
- Q4 FY26
- Q1 FY27E
Q1 FY27 Company Guidance
- Revenue (Q1 FY27)18.0 – 18.2 billion18.0 billion18.2 billion
Midpoint 18.1 · 14.9B a Year AgoStrong Growth · 21.5% YoY ▲
- Revenue (Full Year FY27)72.2 – 73.4 billion72.2 billion73.4 billion
FY26 Actual 63.3BDouble-Digit Growth · 15.0% YoY ▲
- Gross Margin (Non-GAAP)65.5% – 66.5%65.5%66.5%
Last Quarter Actual 66.3%Slight Pressure · 0.3 pt Contraction ▼
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±0.9% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Networking$9.79 BShare 56.8%▲ 28.0% YoY
- Services$3.79 BShare 22.0%
Flat year over year per the release.
- Security$2.23 BShare 12.9%▲ 14.0% YoY
- Collaboration$1.17 BShare 6.8%▲ 12.0% YoY
- Observability$275 MShare 1.6%▲ 6.0% YoY
Key Metrics
Remaining Performance Obligations
$46.7 B
▲ 7.0% YoYPress Release
Operating Cash Flow (Q4)
$5.40 B
▲ 27.0% YoYPress Release
AI Infrastructure Orders (Q4)
$4.00 B
Press Release
AI Infrastructure Orders (FY26)
$9.30 B
Press Release
Share Buybacks (Q4)
$1.50 B
Press Release
Dividends Paid (Q4)
$1.70 B
Press Release
Shares are computed over the segment total: $17.3 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“We delivered a very strong close to fiscal 2026, marking another record year for Cisco.”
- Record AI Infrastructure Demand
- Networking Orders Accelerated
- Record Fiscal 2026
Summary and Review
Summary
Cisco reported $17.3 billion in fiscal fourth-quarter revenue. That is an 18% year-over-year gain, above the high end of guidance. Non-GAAP earnings per share climbed 23% to $1.22, beating the market expectation of $1.17. Networking reached $9.79 billion and grew 28%; security came in at $2.23 billion (+14%) and collaboration at $1.17 billion (+12%). Product orders rose 35%. AI infrastructure orders booked across fiscal 2026 totaled $9.3 billion, and roughly $4 billion of that converted into revenue.
The stock still fell about 4.5% on the results. Investor focus shifted from revenue to margins. Guidance put next-period gross margin at 65.5–66.5%, below the 66.3% delivered last quarter. Hyperscaler AI customers carry lower margins than enterprise products. As orders grow, the mix may dilute margins. The stock was also up 75% over the past year, feeding a 'sell the news' reaction. A $450 million restructuring charge added to the picture. The market questioned not the quarter's quality but how fast growth turns into profit.
The picture is an operationally strong quarter, and the score reflects that. Cisco's shift toward AI infrastructure is tangible. Orders beat targets, networking is accelerating, and RPO backs revenue visibility. The company guides fiscal 2027 to $72.2–73.4 billion in revenue (double-digit growth) and $5.05–5.11 in EPS. That implies the momentum is not a one-quarter event. The key question is how much AI order volume converts into revenue while protecting margins. If the margin curve holds, the quarter's strength can reach the price; otherwise valuation pressure persists.
Full Review
AI orders topped the annual target.
Cisco said it booked $9.3 billion in AI infrastructure orders across fiscal 2026. That is above even its own target, which had been raised to ~$9 billion during the year. In the fourth quarter alone, hyperscaler orders came to roughly $3.7 billion. Year over year, that is an increase of about 4.5x. Around $4 billion of these orders converted into revenue in FY26. The company expects to grow AI revenue to $7.5 billion in FY27. Total product orders rose 35% year over year; excluding hyperscalers, the increase was 25%. At the core of the demand are data-center networking investments from large cloud and model providers. Cisco's own Silicon One chip family and high-capacity switching products sit at the center of that demand. The order volume is rewriting a story long tagged as 'low growth.'
Networking is the growth engine.
The networking segment, about 57% of quarterly revenue, reached $9.79 billion. Year-over-year growth was 28%. Networking product orders rose 40%. That is a faster build than revenue, signaling demand that carries into coming quarters. The segment's drivers are data-center switching and AI connectivity products. Security grew 14% to $2.23 billion and collaboration 12% to $1.17 billion. Observability was the slowest at $275 million (+6%). Still, the entire portfolio is in the green; growth is not tied to a single line. Full-year revenue reached $63.3 billion (+12%). Remaining performance obligations (RPO) stand at $46.7 billion, which supports visibility into future revenue. The momentum in networking is the core of Cisco's thesis for capturing a share of the AI wave.
The one crack is in gross margin.
The weakest point of the quarter is on profitability. Non-GAAP gross margin delivered last quarter was 66.3%. The company guided the next period to 65.5–66.5%. The reason is a rising share of lower-margin hyperscaler AI orders in the mix. Hyperscaler customers operate at lower margins than enterprise products. In other words, as revenue accelerates, the profit on each dollar eases somewhat. A $450 million restructuring charge adds to this. The stock fell about 4.5% after the results. The main reason was this margin sensitivity. The stock was up 75% over the past year, and that valuation had left a thin margin for error. In such a setup, even a mild margin warning triggers a 'sell the news' reaction. The market questioned not the quality of the quarter but the pace at which growth turns into profit.
FY27 guidance says double-digit growth.
Cisco guided next quarter to $18.0–18.2 billion in revenue. Non-GAAP EPS guidance is $1.32–1.34. The midpoint implies about 22% growth over the $14.9 billion a year earlier. For the full year (FY27), guidance is $72.2–73.4 billion in revenue and $5.05–5.11 in EPS. That is a double-digit growth rate over FY26's $63.3 billion. Guidance this far up signals the AI-driven demand is not a one-quarter jump. At the same time, the same guidance concedes margins will be under some pressure. For investors the equation is clear: growth is strong; the question is how well profitability keeps that pace. Next quarter, watch two lines: whether gross margin stays within 65.5–66.5%, and whether AI revenue is tracking toward the $7.5 billion FY27 target.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
5- Revenue and EPS beat expectations, both above the high end of guidance
- Annual AI infrastructure orders of $9.3 billion topped the raised target
- Every segment grewNetworking revenue up 28%
- RPO of $46.7 billion — strong visibility into future revenue
- FY27 guidance points to double-digit revenue growth
Risks
5- Hyperscaler/AI mix pressures gross margin (65.5–66.5% guide)
- Stock up 75% over the past yearValuation narrowed the margin for error
- $450 million restructuring charge weighs on profitability
- Pace and durability of AI orders converting to revenue not yet proven
- Data-center networking competition from Arista and Nvidia persists
What to Watch
3- Q1 FY27 earnings~November 2026
- AI revenue conversion through the year (FY27 target $7.5 billion)
- Margin impact of the restructuring program
Upcoming Earnings
To Understand This