Cisco reported a record FY26 Q4 with revenue of $17.3B (up 18% YoY) and provided robust FY27 guidance of $72.2-73.4B (up ~15% YoY). Management attributed this growth to a 'networking super cycle' driven by AI, with AI infrastructure revenue projected to grow to $7.5B in FY27. The tone was exceptionally bullish, emphasizing strong order momentum, supply chain control, and new design wins. Cisco guides FY27 revenue to $72.2B-$73.4B, a significant acceleration to 15% growth, driven by strong AI infrastructure demand and a broad-based networking refresh.
Cisco reported a record FY26 Q4 with revenue of $17.3B (up 18% YoY) and provided robust FY27 guidance of $72.2-73.4B (up ~15% YoY). Management attributed this growth to a 'networking super cycle' driven by AI, with AI infrastructure revenue projected to grow to $7.5B in FY27. The tone was exceptionally bullish, emphasizing strong order momentum, supply chain control, and new design wins. Cisco guides FY27 revenue to $72.2B-$73.4B, a significant acceleration to 15% growth, driven by strong AI infrastructure demand and a broad-based networking refresh.
Management framed AI as the primary catalyst of a multi-year networking super cycle, with agentic AI adoption driving spend across cloud, on-prem, and edge. They reiterated a record FY26 with $9.3B in hyperscale AI orders and guided to $7.5B in AI infrastructure revenue for…
Demand is robust: total product orders up 35% YoY, hyperscaler orders triple-digit, enterprise orders up 21%, and telco orders up >30%. Excluding hyperscale, orders were up 25%, suggesting broad-based strength across segments and a strong order backlog entering FY27.
AI infrastructure revenue is projected to grow to $7.5B in FY27, up from ~$4B in FY26, despite a much larger backlog of orders ($9.3B in FY26).
Q4 product orders grew 35% YoY, with hyperscale orders up triple digits, fueling the bullish stance.
Management framed AI as the primary catalyst of a multi-year networking super cycle, with agentic AI adoption driving spend across cloud, on-prem, and edge. They reiterated a record FY26 with $9.3B in hyperscale AI orders and guided to $7.5B in AI infrastructure revenue for FY27, asserting a differentiated position via Silicon One, optics, and platform integration.
Demand is robust: total product orders up 35% YoY, hyperscaler orders triple-digit, enterprise orders up 21%, and telco orders up >30%. Excluding hyperscale, orders were up 25%, suggesting broad-based strength across segments and a strong order backlog entering FY27.
Cisco is not a large capex spender but is investing in supply chain and strategic agreements to secure components and memory (e.g., Nanya investment). Management highlighted internal productivity programs and direct TSMC engagement to ensure adequate supply for FY27 and beyond.
Management emphasized record results, accelerating growth, a 'super cycle,' and raised outlook, confidently articulating durable demand drivers.
Memory costs are pressuring gross margins, but management is offsetting with price increases and productivity improvements.
“higher hardware mix and memory costs”
“I think on the AI orders, just for clarity, we did about $4 billion in revenue and $9 billion in orders for FY26.”
“it was about five points in terms of top line revenue growth that we saw in Q4.”
“We've got customers that are running Cisco IQ that are actually assessing their infrastructure, understanding what's last day of support, what can be patched, what can't be patched.”
“we think the network traffic related to AI-based scale across versus traditional data center interconnect is roughly 14x what it might have been before.”
| Показатель | Период | Диапазон | Середина | Статус |
|---|---|---|---|---|
| EPS | FY2027 Q1 | $1.32–$1.34 | $1.33 | MAINTAINED |
| EPS | FY2027 | $5.05–$5.11 | $5.08 | MAINTAINED |
| Gross margin | FY2027 Q1 | 65%–66% | 65.5% | MAINTAINED |
| Op margin | FY2027 Q1 | 35.5%–36.5% | 36% | MAINTAINED |
| Revenue | FY2027 | $72.2B–$73.4B | $72.8B | MAINTAINED |
| Revenue | FY2027 Q1 | $18B–$18.2B | $18.1B | MAINTAINED |
| RevenueAI | FY2027 | $7.5B | $7.5B | INITIATED |
| Дата прогноза | Показатель | Целевой период | Прогноз | Факт | Результат |
|---|---|---|---|---|---|
| FY2026 Q3 | EPS | FY2026 Q4 | $1.16–$1.18 | $1.22 | Met / beat |
| FY2026 Q3 | Gross margin | FY2026 Q4 | 65.5%–66.5% | 64.13% | Missed |
| FY2026 Q3 | Op margin | FY2026 Q4 | 34%–35% | 24.72% | Missed |
| FY2026 Q3 | Revenue | FY2026 Q4 | $16.7B–$16.9B | $17.252B | Met / beat |
| FY2026 Q2 | EPS | FY2026 Q3 | $1.02–$1.04 | $1.06 | Met / beat |
| FY2026 Q2 | Gross margin | FY2026 Q3 | 65.5%–66.5% | 63.63% | Missed |
| FY2026 Q2 | Op margin | FY2026 Q3 | 33.5%–34.5% | 25% | Missed |
| FY2026 Q1 | EPS | FY2026 Q2 | $1.01–$1.03 | $1.04 | Met / beat |
| FY2026 Q1 | Gross margin | FY2026 Q2 | 67.5%–68.5% | 64.97% | Missed |
A leading frontier AI company, likely OpenAI, is deploying Cisco's campus networking, indicating a win for Cisco at a high-profile customer.
“A leading frontier AI company has chosen Cisco's campus networking solution, including Wi-Fi 7 access points, smart switches, and end-to-end segmentation”
… with 20% year-over-year growth in product orders in Q4. Our next generation switching, routing, and wireless products continue to ramp faster than prior products launches with Wi-Fi 7 orders representing more than 50% of total wireless orders in Q4. We see the momentum in campus networking being driven by infrastructure modernization to both scale AI initiatives and to strengthen defenses against a rapidly evolving cyber landscape. A leading frontier AI company has chosen Cisco's campus networking solution, including Wi-Fi 7 access points, smart switches, and end-to-end segmentation to enable innovation at speed and provide the security for that innovation as they rapidly scale to new locations. Orders for our industrial IoT portfolio have also now grown in double digits for nine consecutive quarters and continue to accelerate in Q4, driven by deployments in manufacturing and utilities, as well as in data center facilities where ruggedized networking equipment is needed to withstand extreme operating conditions. Now shifting to security. Our entire security portfolio, including Splunk, saw double digit order growth in Q4. In our core security portfolio, over 1,500 customers …
Cisco has made a strategic investment in Nanya Technology, a memory supplier, indicating a deepening relationship and potential supply assurance for memory components.
“You've seen us make investments like we did in Nanya on the memory side.”
Yeah, thanks for taking the question. Also, congrats on the results. I wanted to try and unpack a little bit more, I guess, the implied guide in this current quarter would suggest over 20% year-over-year growth. It looks like it would imply maybe a deceleration into the subsequent quarters to hit the midpoint of your guidance. So I was wondering if you could help us bridge the $7.5 billion of revenue that you expect from AI, the linearity of what you're assuming through the course of fiscal 27. and then as a quick follow-up, just curious on the supply side, I see the inventory continues to grow. I guess, given the dynamics we're seeing in the component availability environment, what has…
Yeah. Hey, Aaron. So I think, you know, there's a few things in there. I think in terms of just sort of the Q1 versus, you know, rest of year and the implied, you know, slowdown, I think, you know, a couple of things. I think we're being prudent on the remainder of the year. I also think that the two data points that I threw out earlier in terms of the comps getting much tougher, that's certainly, you know, something as well as the overall linearity for the year. being right in line with Q1 being right about 25% of the years. It makes us feel good in total. I think on the $7.5 billion revenue for AI hyperscale, you should sort of expect a good trend line in terms of gradual increases as we move from Q1 through Q4. And then the last piece on the components, I think the big thing is we're really leaning into our financial strength. We feel like we've got a world-class supply chain team, and they've been voted as such actually for a number of years. And we really do not have any significant lead time issues that we're seeing, unlike we've heard a number of different peers talk about. We're consistently, you know, entering into strategic agreements. You've seen us make investments like we did in Nanya on the memory side. We don't have any middleman between us and TSMC. So when we when we are You know, securing silicon, we're looking at the whole supply chain, whether it's wafer, substrates, assembly and test, and really dealing directly with TSMC. We feel we've got adequate supply to meet not only the guide for FY27, but if demand actually strengthens and goes above that, we feel like we're in really good shape to meet that as well.
Cisco deals directly with TSMC for its silicon, giving it a direct line of communication and greater control over its supply chain, a competitive advantage.
Yeah, thanks for taking the question. Also, congrats on the results. I wanted to try and unpack a little bit more, I guess, the implied guide in this current quarter would suggest over 20% year-over-year growth. It looks like it would imply maybe a deceleration into the subsequent quarters to hit the midpoint of your guidance. So I was wondering if you could help us bridge the $7.5 billion of revenue that you expect from AI, the linearity of what you're assuming through the course of fiscal 27. and then as a quick follow-up, just curious on the supply side, I see the inventory continues to grow. I guess, given the dynamics we're seeing in the component availability environment, what has…
Yeah. Hey, Aaron. So I think, you know, there's a few things in there. I think in terms of just sort of the Q1 versus, you know, rest of year and the implied, you know, slowdown, I think, you know, a couple of things. I think we're being prudent on the remainder of the year. I also think that the two data points that I threw out earlier in terms of the comps getting much tougher, that's certainly, you know, something as well as the overall linearity for the year. being right in line with Q1 being right about 25% of the years. It makes us feel good in total. I think on the $7.5 billion revenue for AI hyperscale, you should sort of expect a good trend line in terms of gradual increases as we move from Q1 through Q4. And then the last piece on the components, I think the big thing is we're really leaning into our financial strength. We feel like we've got a world-class supply chain team, and they've been voted as such actually for a number of years. And we really do not have any significant lead time issues that we're seeing, unlike we've heard a number of different peers talk about. We're consistently, you know, entering into strategic agreements. You've seen us make investments like we did in Nanya on the memory side. We don't have any middleman between us and TSMC. So when we when we are You know, securing silicon, we're looking at the whole supply chain, whether it's wafer, substrates, assembly and test, and really dealing directly with TSMC. We feel we've got adequate supply to meet not only the guide for FY27, but if demand actually strengthens and goes above that, we feel like we're in really good shape to meet that as well.
Cisco is replacing a major firewall competitor (likely Palo Alto Networks) at a major bank, gaining share in the security vertical.
… to deploy AI, whether in the public cloud, through NEO or sovereign clouds, on premise or at the edge, we believe Cisco will benefit because of the unmatched depth and breadth of our portfolio and our expertise in each scenario. As we look at overall enterprise demand, we see customers investing in infrastructure across their environments. In Q4, overall data center networking orders grew more than 35% year over year. Notably, a leading U.S. global bank placed an order for 1,000 Cisco data center smart switches, replacing a major networking competitor and a major firewall competitor, transitioning to a secure networking architecture which only Cisco can provide. Customers are also focused on modernizing the workplaces and we continue to see strong demand for campus networking solutions with 20% year-over-year growth in product orders in Q4. Our next generation switching, routing, and wireless products continue to ramp faster than prior products launches with Wi-Fi 7 orders representing more than 50% of total wireless orders in Q4. We see the momentum in campus networking being driven by infrastructure modernization to both scale AI initiatives and to strengthen defenses …
Memory cost inflation is a significant headwind, but Cisco's ability to pass through price increases (adding ~5 points to Q4 revenue growth) showcases a unique pricing power dynamic in the networking industry.
Great. Thanks, guys, for taking my questions. And, you know, Chuck and Scott, I was going to beat a dead horse here. If I think about where your AI orders were a year ago on an LTM basis, I think you guys had done like 2 billion of AI orders. And if I just assume that, you know, half of that got recognized into the revenue mix this year, it feels like you did about 3 billion of REVREC from, you know, over 9.3 billion of orders. I know you don't give backlog numbers, but I guess what I'm trying to understand is, you know, I understand you took the numbers from 6 and 7.5 billion for AI revenue. But again, that just strikes me as very, very conservative. Is there something about the timing of…
Yes, sir, David. So a couple of things there. I think on the AI orders, just for clarity, we did about $4 billion in revenue and $9 billion in orders for FY26. So obviously, you're entering with some good backlog as we go into 27. But these are nonlinear orders that are massive in scale and are usually placed well ahead of time. So I think the $7.5 billion is a good prudent for the year. In terms of the price increases, as you look at the impact on the financials, it was about five points in terms of top line revenue growth that we saw in Q4. As we look to FY27, you're going to begin to lap those price increases that we really started to put in place in the second half there. You have more of an impact in the first half than the second half. And overall, we're sort of planning for that kind of four to five points of impact this year as well. Yet, I would just tell you that price increases are certainly a last resort for us. We're doing everything we can to secure the right supply at the right prices and build up strategic inventory where needed and advance purchase commitments. And we're also doing a lot internally. G2 and the teams have got over 30 different programs that are all around the most efficient utilization of memory in our products. So that certainly helps us as well. Wi-Fi 7 is a big example there where the improvements that the team have done within about a 90-day period actually reduced the memory utilization in Wi-Fi 7 by 50%. So really strong, I think, there as well. So overall, the other thing I guess maybe just to keep in mind for you is the price increases that we've done have been single digit. Unlike other companies that may have a majority of their products that are servers, 95% of what we sell are not servers roughly. And so rather than two thirds of the bill of materials value being in memory, you're in kind of the 15 to 20% of the bill of materials might be memory related for our products. The prices increases that we do are specific to hardware. not specific to software, for instance, and they're really driven towards those products that have a higher level of memory utilization so that we really try to zero in on where the pain is being felt and make sure that we're only passing on what we need to there. But we're doing a good job of passing that price on. I think the customers, while they don't like it, they understand that it's …
Cisco is seeing early, pipeline-building demand from customers looking to replace equipment that has passed its 'last day of support' (LDOS), especially for Mitos readiness, flagging a significant upcoming refresh cycle.
Hi, thanks for the question. And maybe just one for me and somewhat of a follow up, I guess, from some of the other ones that may be pulling at the thread at a different angle. I just wanted to better understand the conversations you're having with enterprise customers and the sustainability of spend here. Specifically, it seems like the spend is really broad based across the IT stack. We're seeing it with the server vendors. We're seeing it with you on the networking side. which is also in this backdrop of this inflationary environment. And so as we take a step back and we think about kind of your enterprise customers' budgets, what are they communicating with you? Are they increasing in…
Yeah, Joseph, I think most of our enterprise customers today They recognize that we are in the midst of probably the fastest moving technology transition that we've ever seen. And for my peers, the CEOs in these companies, there's a combination of ensuring that they're moving with enough caution that they actually get this right, but not moving too slow to where their competition actually creates a competitive differentiation that puts them at a disadvantage. I think that they're continuing to move and they all have a real recognition that if they were to pause, that they put the companies that they run at risk. That's the backdrop. As it relates to budgets, what I think is going on, what we're hearing from our customers is they're currently reprioritizing within their existing budgets. I would also say that you're beginning to see a trend where our customers are looking at AI readiness. mythos readiness, quantum readiness in a similar vein to how they've looked at cybersecurity spend over the last three to four to five years. It's just not optional. And we have to make sure we're ready. We have to make sure that we're secure. We're prepared. We're doing the best we can not to not to have vulnerabilities exposed. And I think from that perspective, that's creating a shift of dollars from other areas in the organizations to IT to actually do that work. And so as an example, we haven't seen a massive amount of impact from Mythos yet, but we are having a ton of conversations. We've got customers that are running Cisco IQ that are actually assessing their infrastructure, understanding what's last day of support, what can be patched, what can't be patched. And we've seen the pipeline increase meaningfully as a result of Mythos, which is really showing up as a network refresh, but as probably underneath viewed as a cybersecurity spin. So that's kind of what we're seeing in that space.