Cisco Systems reported a fourth quarter with $17.25 billion in revenue and adjusted earnings of $1.22 per share, driven by a surge in artificial intelligence infrastructure orders. Despite beating Wall Street expectations and raising its fiscal 2027 forecast, Cisco stock dropped in extended trading.
Networking giant siliconangle.com delivered a powerful finish to fiscal 2026, coasting past analyst expectations as artificial intelligence infrastructure spending accelerated. Wall Street had turned increasingly bullish on the company heading into the report, pushing shares up more than 60% over the quarter and roughly 8% in August alone on mounting optimism that the networking stalwart would capture a central role in the AI build-out. The financial results released on Wednesday, August 12, 2026, confirmed that momentum.
Yet, the market reaction proved paradoxical. Even as the company posted top-and-bottom-line beats and Cisco shares dropped in extended trading, the underlying operational metrics pointed to rapid, sustained expansion across the firm’s core product lines.
Financial Performance and the Earnings Beat
For the fourth quarter, Cisco reported adjusted earnings of $1.22 per share, comfortably ahead of the $1.17 analyst consensus estimated by LSEG. Total revenue climbed 18% to $17.25 billion, surpassing the $16.82 billion Wall Street forecast. Net income experienced an even sharper surge, jumping 51% from the year-ago period to $3.9 billion, or 97 cents a share, compared with $2.6 billion, or 64 cents a share, in the previous year.
Full-year figures for fiscal 2026 underscored the broader upward trajectory. Cisco revenue increased 12% to $63.3 billion, while GAAP net income climbed 30% to $13.3 billion. GAAP earnings per share rose 31% to $3.33. The company also returned capital directly to its shareholders, distributing $3.2 billion via dividends and stock buybacks during the quarter while declaring a quarterly dividend of $0.42 per share.
Hyperscalers and AI Infrastructure Momentum
The primary catalyst behind the strong quarter was the explosive demand for artificial intelligence hardware from massive cloud operators. Hyperscalers placed orders worth $4 billion for AI infrastructure during the fourth quarter alone, bringing the cumulative total for fiscal 2026 to $9.3 billion. That group generated approximately $4 billion in revenue over the past fiscal year.
Cisco expects that specific revenue stream to nearly double, forecasting that hyperscaler AI revenue will climb to $7.5 billion in fiscal 2027. Total product orders across the company increased 35% year over year, while networking product orders jumped 40%, extending a streak of double-digit order growth to eight consecutive quarters.
“Cisco delivered record quarterly revenue in Q3 and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI.”
Chuck Robbins, Chairman and CEO, Cisco
That segment generated $9.79 billion in revenue, up 28% from a year earlier and beating the Street forecast of $9.66 billion. Chief Executive Chuck Robbins emphasized the firm’s competitive standing in a statement on the results: With the breadth and depth of our portfolio and our competitive differentiation in secure networking, Cisco is well positioned to support our customers however or wherever they decide to deploy AI.
Margin Pressures and Investor Reaction
Despite the strong earnings and revenue beat, the stock slipped in after-hours trading as investors weighed compressed margins against the otherwise bullish headline figures. Gross margins fell to 66.3%, down from 68.4% in the same period one year prior. Industry analysts point to rising component expenses—particularly memory chips utilized in advanced networking hardware—as the likely driver behind the margin contraction.
Trading sentiment ahead of the report had been overwhelmingly favorable. Polymarket data indicated a 93% implied probability that Cisco would beat expectations, backed by a 100% historical accuracy rate on prior platform predictions. With the stock up more than 60% over the preceding quarter, some market participants appeared to use the earnings release as an opportunity to take profits.
Forward Outlook for Fiscal 2027
Looking ahead, Cisco issued guidance that sailed past consensus estimates across both the current quarter and the full fiscal year.
For the full 2027 fiscal year, Cisco provided full year guidance looking at earnings of $5.05 to $5.11 per share on total sales ranging from $72.2 billion to $73.4 billion. Those figures easily outpaced analyst forecasts calling for $4.83 per share in earnings and $69.1 billion in sales, signaling that executive leadership expects the AI-driven networking boom to maintain its velocity well into the future.
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