Global Finance News
13 Aug 2026, 10:08
Cisco Stock Falls 4.7% Despite Record Earnings as Margin Outlook Weighs on AI-Fueled Growth
Cisco Systems (NASDAQ: CSCO) shares fell 4.7% in premarket trading Thursday despite reporting record fiscal fourth-quarter results, as investors appeared to focus on profitability expectations and whether rapid AI infrastructure growth can translate into sufficient earnings upside.
Cisco reported Q4 revenue of $17.3 billion, up 18% year over year, while non-GAAP EPS increased 23% to $1.22. Networking revenue jumped 28%, and total product orders surged 35%, highlighting strong demand across the business.
AI Infrastructure Demand Accelerates
AI was one of the strongest parts of the report. Cisco received $4 billion of AI infrastructure orders from hyperscalers during Q4, bringing fiscal 2026 orders to $9.3 billion. The company generated approximately $4 billion in AI infrastructure revenue during the year and expects that figure to climb to $7.5 billion in fiscal 2027.
Networking orders increased 40% in Q4, marking the eighth consecutive quarter of double-digit growth and supporting management's view that a networking "supercycle" is underway.
However, margins provided a potential reason for the negative share reaction. Non-GAAP gross margin declined to 66.3% from 68.4% a year earlier despite the substantial revenue growth. Cisco's Q1 FY2027 guidance calls for a non-GAAP gross margin of 65%-66%, indicating further pressure at the midpoint.
For fiscal 2027, Cisco expects revenue of $72.2 billion to $73.4 billion and non-GAAP EPS of $5.05 to $5.11.
The premarket decline suggests investors expected even stronger profitability and guidance after Cisco's recent AI-driven momentum. Still, rapidly expanding hyperscaler orders and the expected rise in AI infrastructure revenue leave Cisco increasingly positioned as a major networking beneficiary of global AI data center investment.
Cisco Systems (NASDAQ: CSCO) shares fell 4.7% in premarket trading Thursday despite reporting record fiscal fourth-quarter results, as investors appeared to focus on profitability expectations and whether rapid AI infrastructure growth can translate into sufficient earnings upside.
Cisco reported Q4 revenue of $17.3 billion, up 18% year over year, while non-GAAP EPS increased 23% to $1.22. Networking revenue jumped 28%, and total product orders surged 35%, highlighting strong demand across the business.
AI Infrastructure Demand Accelerates
AI was one of the strongest parts of the report. Cisco received $4 billion of AI infrastructure orders from hyperscalers during Q4, bringing fiscal 2026 orders to $9.3 billion. The company generated approximately $4 billion in AI infrastructure revenue during the year and expects that figure to climb to $7.5 billion in fiscal 2027.
Networking orders increased 40% in Q4, marking the eighth consecutive quarter of double-digit growth and supporting management's view that a networking "supercycle" is underway.
However, margins provided a potential reason for the negative share reaction. Non-GAAP gross margin declined to 66.3% from 68.4% a year earlier despite the substantial revenue growth. Cisco's Q1 FY2027 guidance calls for a non-GAAP gross margin of 65%-66%, indicating further pressure at the midpoint.
For fiscal 2027, Cisco expects revenue of $72.2 billion to $73.4 billion and non-GAAP EPS of $5.05 to $5.11.
The premarket decline suggests investors expected even stronger profitability and guidance after Cisco's recent AI-driven momentum. Still, rapidly expanding hyperscaler orders and the expected rise in AI infrastructure revenue leave Cisco increasingly positioned as a major networking beneficiary of global AI data center investment.
