Cisco Systems reported fiscal fourth-quarter financial results that surpassed Wall Street expectations on top-line revenue, adjusted earnings per share, and forward guidance, driven by accelerating artificial intelligence infrastructure demand. However, shares of the networking technology leader fell 3.9% in extended trading on Wednesday after flat year-over-year growth in services revenue missed analyst consensus targets.
Despite the initial market hesitation, the company showcased significant operational strength in its hardware division and raised its financial targets for the upcoming fiscal year. Cisco’s performance reflects a broader enterprise recalibration as major cloud providers and hyper-scale data center operators scale up hardware purchases to power AI workloads.
Services Softness Offsets Record Top Line
For the quarter ended July 25, Cisco posted total revenue of $17.25 billion, an 18% increase from $14.7 billion in the same period a year earlier. The figure comfortably topped Wall Street estimates of $16.84 billion. Adjusted earnings per share reached $1.22, up from $0.99 in the prior-year quarter and above the consensus estimate of $1.17. Net income rose 51% to $3.9 billion, or 97 cents per share, compared with $2.6 billion, or 64 cents per share, a year ago.
The catalyst for the post-earnings sell-off stemmed from the performance of Cisco’s services segment. Services revenue came in flat year-over-year at $3.79 billion, falling short of the $3.81 billion consensus surveyed by FactSet. In contrast, product sales surged 24% to $13.46 billion, beating analyst estimates of $13.04 billion.
Addressing the quarter’s overall operational performance, Chief Financial Officer Mark Patterson emphasized that Cisco delivered record revenue, non-GAAP operating income, and adjusted earnings per share, with all metrics exceeding the top end of internal guidance ranges. Patterson highlighted that the results demonstrated strong financial discipline and operational leverage across core lines of business.
AI Infrastructure Orders Surge Across Hyperscalers
The primary engine driving product growth was demand from hyperscale internet companies constructing next-generation artificial intelligence infrastructure. According to company data, hyperscalers placed $4 billion in enterprise infrastructure orders during the fourth quarter alone. This brought total fiscal year 2026 orders from this client segment to $9.3 billion.
Revenue recognized from hyperscalers reached approximately $4 billion in fiscal 2026. Management expressed confidence that this trajectory will continue, projecting that hyperscaler revenue will nearly double to $7.5 billion in fiscal 2027 as large-scale cluster deployments accelerate.
To bolster its technical portfolio during the quarter, Cisco completed two key acquisitions: observability firm Galileo Technologies and non-human identity security provider Astrix Securities. These additions are designed to expand Cisco’s visibility and posture management capabilities across hybrid cloud environments.
Elevated Fiscal 2027 Guidance
Looking ahead, Cisco issued guidance for the fiscal first quarter of 2027 that exceeded consensus expectations. The company projects revenue between $18.0 billion and $18.2 billion, compared with market expectations of $16.83 billion. Adjusted EPS is expected to range between $1.32 and $1.34, well above Wall Street’s $1.16 forecast.
For full-year fiscal 2027, Cisco forecasts adjusted EPS between $5.05 and $5.11 on total revenue of $72.2 billion to $73.4 billion. Both metrics sit comfortably above consensus estimates of $4.83 per share and $69.12 billion in revenue, respectively.
Prior to Wednesday’s late trading decline, Cisco shares had appreciated nearly 61% year-to-date. Industry dynamics remain active, with networking peer Arista Networks reporting stronger-than-expected results last week, while server and networking provider Hewlett Packard Enterprise is scheduled to report its fiscal third-quarter results in September.