Cisco’s AI networking business is now big enough to move the whole company. Hyperscalers placed $4 billion of AI infrastructure orders with Cisco in its fiscal fourth quarter, bringing the fiscal 2026 total to $9.3 billion, about 4.5 times the prior year, according to the company’s earnings release.
Quarterly revenue rose 18% to a record $17.3 billion, and full-year revenue reached $63.3 billion, up 12%. Product orders jumped 35% in the quarter, or 25% excluding hyperscalers. Networking orders grew 40%, the eighth straight quarter of double-digit growth. Cisco’s release says a “networking supercycle” is underway.
Cisco recognized about $4 billion of hyperscaler AI revenue in fiscal 2026 and expects $7.5 billion in fiscal 2027. On the earnings call, Cisco said that business made up about 6% of total revenue in fiscal 2026, up from less than 2% a year earlier. About 60% of the orders were Silicon One-based systems and 40% optics, and the Acacia optics unit alone took more than $1 billion in orders in the quarter. Cisco also won three new hyperscaler design wins, including one for its P200-powered scale-across systems.
Demand isn’t limited to the biggest clouds. Cisco took more than $400 million of AI orders from neocloud, sovereign and enterprise customers in the quarter and $1.3 billion for the year, per its investor presentation. By customer market, service provider and cloud orders grew 95%, public sector 30% and enterprise 21%, CFO Mark Patterson said on the call.
Why the stock fell
Shares dropped more than 8% after the report, The Motley Fool noted. Margins were the sore spot. Non-GAAP gross margin slipped to 66.3%, down 210 basis points from a year earlier, and product gross margin fell 270 basis points to 64.8%, which Patterson put down mainly to a heavier hardware mix and memory costs. Software revenue grew a slower 11% to $6.2 billion.
Robbins argued customers can’t afford to wait. “It’s the fastest-moving technology transition that we’ve ever seen,” he said, according to Yahoo Finance. “Most customers know that if they pause or slow down, they run the risk of being way behind.”
Cisco returned $12.7 billion to shareholders in fiscal 2026 and raised its dividend for the 15th year in a row. For fiscal 2027 it guided to about 15% revenue growth and 17% earnings-per-share growth. If the $7.5 billion AI target holds, hyperscaler AI gear would make up roughly a tenth of that revenue.
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