Cisco Systems (NASDAQ: CSCO) closed FY26 with a record $17.3 billion in Q4 revenue, up 18% year over year, while non-GAAP EPS climbed 23% to $1.22. Those are backward-looking numbers, so the better read on where Cisco is headed comes from what customers are committing to now and whether those commitments can keep the company’s growth rate elevated over the coming quarters.
The company’s product orders jumped 35% in Q4, with networking product orders up 40%. Even excluding hyperscalers, product orders still grew 25%, while Enterprise orders rose 21%.
In fact, according to the earnings release, the company isn’t relying on a handful of hyperscalers to carry the entire AI story; enterprise customers are spending more, service providers are spending more, and the networking business itself is seeing sustained order growth.
AI is sitting underneath much of that spending, as customers build the infrastructure needed to connect increasingly large and distributed workloads, and Cisco is positioned across that stack rather than in just one corner of it.
The hyperscaler numbers show just how quickly that piece of the business is developing, and that’s where we need to look next.
A $9.3 Billion Business
The company booked $4 billion in hyperscaler AI infrastructure orders during Q4, taking the FY26 total to $9.3 billion, roughly 4.5 times what it booked in FY25. Management expects hyperscaler AI infrastructure revenue to reach $7.5 billion in FY27, compared with roughly $4 billion in FY26.
That growth is coming through Cisco’s networking portfolio, particularly its Silicon One systems and Acacia optics, which together represented roughly 60% and 40% of FY26 hyperscaler AI orders, respectively. The company also secured three new hyperscaler design wins in Q4, including another Silicon One P200 system for scale-across workloads.
I also like what is happening outside the hyperscaler bucket. Cisco took more than $400 million of AI infrastructure orders from neocloud, sovereign and enterprise customers in Q4, bringing FY26’s total to more than $1 billion. Enterprise Nexus switch orders tagged for AI deployments also rose more than 85% sequentially.
So Cisco isn’t betting the entire AI opportunity on one customer type or one deployment model; the same networking demand is beginning to spread from giant cloud providers into enterprises and newer AI infrastructure operators. That gives the company a much broader runway than simply supplying hyperscalers with another wave of hardware.
But Cisco Is Paying For The AI Boom In Gross Margin
Cisco Systems’ AI opportunity is getting bigger, but the mix of business coming with it is putting some pressure on profitability, with non-GAAP product gross margin falling 270 basis points year over year to 64.8% as a higher hardware mix and memory costs weighed on the quarter.
That trade-off is worth watching because Cisco is moving deeper into hardware-heavy AI infrastructure at the same time its networking business is accelerating, meaning more revenue does not automatically translate into the same level of gross profit. The good news is that the company isn’t letting that pressure flow straight through to the bottom line: non-GAAP operating margin rose to 35.9%, while EPS climbed 23%.
Management also expects FY27 revenue of $72.2 billion to $73.4 billion, compared with $63.3 billion in FY26, alongside non-GAAP EPS of $5.05 to $5.11.
That leaves Cisco with a fairly simple balancing act: keep the AI-driven hardware growth coming without allowing the lower-margin mix to eat away at the operating leverage that made this quarter so strong.
Cisco’s Chart Hasn’t Broken The Bull Case
Cisco Systems closed the regular session at $123.88, up 2.86%, before slipping in after-hours trading, but the broader setup still leaves room for the bulls. Shares had pushed above the $116.20 20-day and $118.01 50-day moving averages, leaving the recent June high around $130 as the obvious hurdle. A move through that area would give the earnings reaction more credibility, especially after the stock spent much of the summer consolidating beneath it.
The other thing I’d watch is whether the $118 area can hold if the initial earnings excitement fades, because that zone now sits around the 50-day moving average and could become the line between a healthy consolidation and a failed breakout. With Cisco’s order growth running ahead of reported revenue, I wouldn’t be surprised to see buyers take another shot at $130 if the stock can stay above that support.
The Business Is Moving In A Direction I Like
I’m not ready to call Cisco Systems an AI rocket ship, but the business is moving in a direction I like: orders are accelerating, hyperscaler AI infrastructure is scaling quickly, and management is guiding to another year of revenue and EPS growth. FY27 revenue is expected to reach $72.2 billion–$73.4 billion, while non-GAAP EPS is guided to $5.05-$5.11, giving investors a fairly clear benchmark for whether this AI-driven acceleration is actually making its way into the financials.
But like I said, there is still the gross-margin issue to watch, particularly with product margins already feeling the weight of the heavier hardware mix and memory costs. But CSCO finished FY26 with $15.9 billion in cash, $5.4 billion of quarterly operating cash flow and $12.7 billion returned to shareholders, so this isn’t a business that needs the AI boom to survive.
If the company can keep converting those orders into revenue while protecting its operating leverage, $130 may end up looking less like a ceiling and more like the next stop.
