A beat and raise this size should lend support to the AI infrastructure trade beyond Cisco itself. It suggests hyperscaler capex is still flowing into networking, not just into chips. The revenue raise puts the new full-year range above the old one, so analysts’ estimates are likely to move higher in the coming days. For tech-heavy indices, Cisco gives another sign that AI spending is broadening into older hardware names. That supports the view that the AI build-out still has room to run. The main risk to that read is any pullback in cloud spending plans, since this outlook depends heavily on a small group of very large customers.
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Cisco beat on the quarter, guided well above forecasts and raised its full-year view, as AI networking demand from cloud giants turns it into an AI infrastructure name.
Summary:
- Fiscal Q1 adjusted EPS of $1.40 beat the $1.33 consensus, and revenue of around $18.5bn, up 24%, topped forecasts near $18.1bn
- Q2 guidance: adjusted EPS of $1.34 to $1.36 against $1.23 expected, and revenue of $18.0bn to $18.2bn against around $17.9bn
- FY27 adjusted EPS range raised to $5.47 to $5.53 from $5.05 to $5.11, against a $5.11 consensus
- FY27 revenue range raised to $74.8bn to $75.8bn from $72.2bn to $73.4bn, against a consensus of around $73bn
- Networking revenue rose 43% and total product revenue 32%, while services grew just 1%
- Expected AI infrastructure revenue from hyperscalers raised to $9bn for FY27, more than double the FY26 total
Cisco Systems beat Wall Street forecasts for its fiscal first quarter and raised its full-year outlook well above consensus. Demand for AI networking gear from the largest cloud operators lifted product sales sharply. Adjusted earnings were $1.40 a share against expectations of $1.33. Revenue rose 24% from a year earlier to around $18.5 billion, ahead of the roughly $18.1 billion analysts had expected for the quarter ended 24 October.
Cisco Systems, based in San Jose, California, is one of the world’s largest makers of networking equipment. It was founded in 1984 and built its business on the routers and switches that move data across corporate networks, telecom systems and the internet. Over the past decade it has moved towards software, subscriptions and security. It also owns the Webex collaboration platform and bought data analytics firm Splunk in 2024, which now sits at the centre of its observability business. Cisco has long been treated as a mature, steady tech name. It is now being repositioned as an AI infrastructure play, since the big cloud operators need its high-speed networking gear to connect the large clusters of chips used to train and run AI models.
The guidance is the bigger story. Cisco said in its earnings release that it expects second-quarter adjusted EPS of $1.34 to $1.36, well above the $1.23 consensus. It expects revenue of $18.0 billion to $18.2 billion, against forecasts of about $17.9 billion. For fiscal 2027 as a whole, Cisco raised its adjusted EPS range to $5.47 to $5.53, from $5.05 to $5.11. It also raised its revenue range to $74.8 billion to $75.8 billion, from $72.2 billion to $73.4 billion. Consensus estimates had sat at $5.11 and around $73 billion, roughly at the top and the middle of the old ranges.
Networking did most of the work. Product revenue rose 32%, with networking up 43%, while services barely moved, up 1%. Security, collaboration and observability all grew in single digits. Every region grew, led by the Americas at 28%. Cisco also raised its expected AI infrastructure revenue from hyperscalers to $9 billion this fiscal year, more than double its fiscal 2026 total.
Chief executive Chuck Robbins said the company is in the early stages of what he called a multi-year networking supercycle. Chief financial officer Mark Patterson said the quarter gave management the confidence to raise its forecasts. Cisco also returned $3.7 billion to shareholders through dividends and buybacks, and has $6.1 billion of buyback authorisation left.
The question from here is whether the growth lasts. A guidance raise this large suggests Cisco can see demand well beyond one quarter, but it also depends heavily on hyperscaler spending. Any sign that the big cloud operators are slowing their AI build-out would hit the networking line first. Services growth of just 1% is also a reminder that the rest of the business is not keeping pace with the AI-driven product cycle.
This article was written by Eamonn Sheridan at investinglive.com.