Cisco Earnings: We Raise Our AI Forecast After Strong Results and Guidance

Key Morningstar Metrics for Cisco Systems

• Fair Value Estimate: $61.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Cisco Systems’ Earnings

Cisco Systems’ CSCO fourth-quarter results reached the high end of guidance. Revenue rose 8% year over year and 4% sequentially to $14.7 billion. Fiscal 2026 guidance calls for revenue growth of 5% and non-GAAP earnings growth of 6%, at the midpoints.

Why it matters: Cisco’s results exhibited great and broad-based demand for networking equipment and services across enterprise, cloud, and artificial intelligence customers. Fiscal 2026 guidance largely met our model and reflects continued positive networking momentum across campus and AI customers.

• AI revenue reached $1 billion in fiscal 2025 on $2 billion in orders, and Cisco saw more than 100% year-over-year order growth from cloud and AI customers in each quarter of fiscal 2025. We see both figures as reflecting continued growth momentum into the new fiscal year.
• We expect good growth out of Cisco’s core campus and enterprise markets in fiscal 2026, as enterprises refresh their networks roughly four to five years after investments made during the initial wave of the covid-19 pandemic.

The bottom line: We raise our fair value estimate for wide-moat Cisco to $61 per share from $56 after lifting our five-year AI forecast for the firm. AI momentum has exceeded our expectations thus far, and we expect strong growth to endure into the medium term. Valuation is challenging at current levels.

• We expect 5% networking growth for Cisco over the next five years, which is a positive inflection from recent low-single-digit growth. We see rapid AI growth driving this inflection, rising at a 50% annualized rate over our forecast and growing as a piece of the overall networking pie.
• We remain skeptical of Cisco’s 2025 appreciation from a rapidly growing but relatively small AI business. AI contributed 2% of total revenue in fiscal 2026, and we forecast this to rise to 10% in fiscal 2030. While positive, we see it as a minority contributor against a larger enterprise business.