Key Points:
- Networking giant Cisco Systems reported fiscal fourth-quarter revenue of $17.3 billion, beating Wall Street consensus estimates.
- Adjusted earnings per share reached $1.22, surpassing the anticipated $1.17 forecast.
- Hyperscale artificial intelligence infrastructure orders reached $4 billion for the quarter, bringing the full fiscal-year total to $9.3 billion.
- Despite record-breaking metrics and a raised fiscal 2027 outlook, company shares tumbled nearly 9% as investors focused on a cautious gross margin forecast.
Networking and communications leader Cisco Systems delivered a record-breaking fiscal fourth-quarter earnings report, yet saw its stock pressured significantly by Wall Street. Despite beating analyst expectations across both top and bottom lines and issuing robust forward guidance, investor concerns regarding profitability margins caused shares to slide nearly 9% during the session.
For the period ending in July, Cisco posted record revenue of $17.3 billion, marking an 18% increase compared to the same period in the previous year. Non-GAAP earnings per share came in at $1.22, up 23% year-over-year and comfortably outperforming the $1.17 predicted by market analysts. Total product orders jumped 35% year-over-year, driven heavily by an explosive surge in demand from major cloud providers building out data centers.
The standout highlight of the financial report was the rapid acceleration of artificial intelligence infrastructure orders. Hyperscalers placed $4 billion in artificial intelligence networking orders during the fourth quarter alone, pushing the full fiscal-year total to $9.3 billion—roughly 4.5 times the volume recorded in the previous fiscal year. Chief Executive Officer Chuck Robbins emphasized that surging demand for advanced computing tools is powering the industry toward a major networking supercycle.
Looking ahead to fiscal 2027, management projected annual revenue between $72.2 billion and $73.4 billion, with adjusted earnings expected to range from $5.05 to $5.11 per share, towering above average Wall Street projections. Furthermore, the company anticipates generating $7.5 billion in artificial intelligence-related revenue from hyperscalers over the course of fiscal 2027.
Despite the strong performance metrics and raised forecasts, investors focused on a slight contraction in profitability margins. Cisco guided first-quarter non-GAAP gross margins to 65%–66%, coming in slightly below analyst expectations. Chief Financial Officer Mark Patterson explained that shipping high volumes of hardware-heavy artificial intelligence gear creates a temporary gross margin headwind, as the revenue mix shifts away from higher-margin software and services.
Market analysts note that the stock’s sharp pullback was also amplified by valuation dynamics, as the share price had already climbed significantly earlier in the year. While profit-taking created near-term downside pressure, the underlying order book confirms that the networking supercycle driven by artificial intelligence infrastructure is operating at full speed.
