Cisco reports Q4 beat, raises guidance on AI networking demand

Cisco Systems, Inc. (NASDAQ: CSCO ) stock traded lower Thursday morning despite the company reporting better-than-expected fiscal fourth-quarter 2026 results and issuing guidance above Wall Street estimates.

Revenue rose to $17.25 billion, topping the $16.82 billion analyst estimate.

Adjusted earnings of $1.22 per share beat the $1.17 consensus estimate.

Management described the current environment as the early stages of a multi-year networking and AI infrastructure supercycle.

The company cited accelerating AI adoption, hyperscaler investment, enterprise AI deployments, cybersecurity demand and high-performance networking.

During the earnings call, CEO Chuck Robbins said companies increasingly view AI readiness, cybersecurity and infrastructure upgrades as essential spending.

Customers are shifting money from other budgets into IT because falling behind could put their businesses at a competitive disadvantage.

Robbins said the spending is becoming similar to cybersecurity investments: "It's just not optional." Cisco said the trend is helping fuel what it calls a multiyear networking "super cycle." Cisco Q4 Earnings Snapshot Cisco's product revenue rose 24% year over year to $13.5 billion, while services revenue was flat at $3.8 billion.

Total remaining performance obligations, or RPO, increased 7% to $46.7 billion.

Product RPO rose 9%, while annual recurring revenue reached $32.1 billion, up 3%.

Subscription revenue represented 48% of quarterly revenue.

Software revenue increased 11% to $6.2 billion.

Adjusted gross margin was 66.3%, while adjusted operating margin was 35.9%.

Operating cash flow climbed 27% to $5.4 billion.

Cisco ended the quarter with $15.9 billion in cash, cash equivalents and investments.

The company returned $3.2 billion to shareholders, including $1.7 billion in dividends and $1.5 billion in share repurchases.

Cisco had $8.1 billion remaining under its stock repurchase authorization.

AI And Networking Orders Surge Product orders jumped 35% year over year in the fourth quarter.

Orders increased 44% in the Americas, 25% in EMEA and 19% in APJC.

Hyperscaler orders grew at a triple-digit rate, while service provider and cloud orders surged 95%.

Enterprise orders rose 21%, and public-sector orders increased 30%.

Networking orders climbed 40%, marking the eighth consecutive quarter of double-digit growth.

Networking revenue increased 28%.

Cisco secured $4 billion in hyperscaler AI infrastructure orders during the quarter.

That brought fiscal 2026 orders to $9.3 billion, about 4.5 times the fiscal 2025 level.

Acacia generated more than $1 billion in orders.

Cisco also shipped more than 850 400G and over 75 800G coherent pluggable optics.

The company added three hyperscaler design wins and expects several more AI design wins over the next six months across its Silicon One platforms and optics.

AI infrastructure orders from neo-cloud, sovereign-cloud and enterprise customers exceeded $400 million in the quarter and topped $1 billion for fiscal 2026.

Enterprise AI demand also strengthened.

AI-tagged Nexus switch orders increased more than 85% sequentially, while data-center networking orders rose more than 35%.

Wi-Fi 7 represented more than half of wireless orders.

Security And AI Adoption Gain Momentum Security orders grew by double digits.

More than 1,500 customers adopted Cisco's new security products during the quarter, bringing cumulative net-new customers to more than 6,400.

Firewall orders increased more than 30%.

Splunk added more than 280 new logos during the quarter and surpassed 1,000 for fiscal 2026.