Cisco sees record results from an AI 'supercycle,' but its stock pulls back

By Christine Ji

An 18% revenue surge and blowout 2027 forecast aren't enough to sustain Cisco's stock momentum

Shares of Cisco have risen over 60% in 2026.

Cisco's artificial-intelligence pivot is driving impressive growth, but even a blockbuster fourth quarter wasn't enough to satisfy Wall Street on Wednesday.

Cisco's (CSCO) fiscal fourth-quarter earnings surpassed expectations as a "networking supercycle" sent demand to record levels, the company said. Though the stock initially rose in Wednesday's extended session, it ended after-hours trading down 4%.

Investors have piled into Cisco as an AI infrastructure play this year, sending the stock up 63% year to date heading into Wednesday's report.

Revenue grew 18% from a year before to reach $17.3 billion in the fourth quarter, surpassing the $16.8 billion anticipated by Wall Street analysts. Adjusted earnings per share of $1.22 also exceeded the $1.17 FactSet consensus view.

Cisco's fourth-quarter performance meant new records for revenue, adjusted operating income and earnings per share, Cisco CFO Mark Patterson said in a statement. Adjusted operating margin for the fourth quarter was 35.9%.

Gross margins, however, contracted in the quarter relative to a year before. On an adjusted basis, Cisco posted a 66.3% gross margin for the period, relative to 68.4% in the year-earlier quarter.

The company's switches, routers and other networking solutions have become critical inputs in data-center server racks. Cisco saw data-center switching orders increase over 25% in 2026. Agentic AI workloads could lead to an over 450% increase in traffic compared to today's chatbot levels, the company believes.

As the AI infrastructure boom continues, Cisco forecast $18 billion to $18.2 billion in revenue for the first quarter of 2027, beating FactSet estimates of $16.83 billion. For the full year, Cisco anticipates $72.2 billion to $73.4 billion of revenue, also blowing past Wall Street expectations of $69.1 billion.

In particular, Cisco expects AI infrastructure revenue to grow to $7.5 billion in fiscal 2027 - a significant jump from fiscal 2026, when approximately 6% of total revenue came from hyperscalers, the company said on the earnings call.

-Christine Ji

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08-12-26 2116ET