Cisco exceeds expectations: AI revenue hits $9B
Cisco Systems, the global networking technology giant, announced stellar fiscal first-quarter 2027 results on November 12, 2026, significantly surpassing Wall Street expectations. Cisco exceeds expectations with a robust forecast for its artificial intelligence (AI) infrastructure revenue, now projected to hit $9 billion for the fiscal year, more than double the figure from fiscal 2026.
This impressive performance, driven by strong demand across its core networking segments and a burgeoning AI market, saw Cisco’s shares rise in after-hours trading. The company’s strategic pivot towards AI-driven solutions appears to be gaining substantial traction, positioning it as a key player in the ongoing technological transformation.
Cisco exceeds expectations in fiscal first quarter 2027
For the quarter that ended October 24, 2026, Cisco reported adjusted earnings per share (EPS) of $1.40, comfortably beating LSEG consensus estimates of $1.33. Revenue also exceeded projections, reaching $18.5 billion against an expected $18.1 billion, marking a substantial 24% increase from $14.88 billion a year earlier. This represents Cisco’s fastest quarterly growth in over 15 years.
Net income for the quarter surged to $4.6 billion, or $1.14 per share, a significant jump from $2.9 billion, or 72 cents per share, in the same period last year. The strong top-line growth was supported by robust product revenue, which climbed 32% year-over-year to $14.7 billion. This indicates strong underlying business momentum.
Networking segment drives product revenue surge
The company’s core networking revenue stood out, increasing by an impressive 43% year-over-year to $11.1 billion. This segment’s performance highlights the sustained demand for Cisco’s foundational hardware and software solutions in an increasingly connected world. Other product areas also showed positive, albeit more modest, growth.
Security revenue grew 7% to $2.12 billion, while collaboration revenue increased 8% to $1.14 billion. Observability revenue saw a 2% rise, reaching $279 million. Service revenue, however, experienced more subdued growth, up just 1% to $3.9 billion. These figures collectively underscore the breadth of Cisco’s market reach.
Cisco doubles down on AI infrastructure projections
A key highlight from the earnings report was Cisco’s revised outlook for AI infrastructure revenue. The company now anticipates generating $9 billion in AI infrastructure revenue from hyperscalers in fiscal 2027. This revised figure represents more than double the approximately $4 billion achieved in fiscal 2026, significantly up from the previous fiscal 2027 forecast of $7.5 billion.
This aggressive upward revision signals Cisco’s growing confidence in its ability to capture a larger share of the burgeoning AI market. Chief Executive Officer Chuck Robbins emphasized the company’s strategic position. “Organizations are turning to Cisco for our trusted, market-defining technology and our expertise to help them scale, secure and optimize their environments for the agentic AI era,” Robbins stated.
Robbins further noted that the company is experiencing a “multi-year networking supercycle.” This supercycle is driven by massive investments in expanding and securing infrastructure essential for intelligent AI. This outlook suggests a sustained period of growth for networking providers like Cisco.
The company expects AI hyperscale revenue to constitute 12% of its total revenue in fiscal 2027. This is a notable increase from the 6% recorded in fiscal 2026. Such a rapid expansion in AI-related revenue underscores the company’s successful pivot and investment in this critical sector.
Strategic moves bolster AI capabilities
Cisco has been actively building out its AI portfolio through both internal development and strategic acquisitions. The company’s AI strategy rests on four key pillars: AI Infrastructure, AgenticOps for intelligent IT automation, Security for AI, and Observability for AI. These integrated solutions aim to provide a secure and efficient foundation for enterprise AI deployments.
Products like Cisco Nexus Hyperfabric AI, which integrates NVIDIA accelerated computing with Cisco’s Ethernet networking, are central to this strategy. Cisco AI PODs offer pre-configured infrastructure bundles optimized for specific AI workloads. These offerings are designed to meet the intensive demands of modern AI computing.
The company has also made several key acquisitions to enhance its AI capabilities. These include NeuralFabric Corp. for enterprise AI platforms, Galileo Technologies Inc. for AI observability, and Astrix Security for identity protection. These strategic purchases illustrate Cisco’s commitment to becoming a comprehensive AI solution provider.
This aggressive push into advanced computing infrastructure aligns with the broader industry trend of escalating demands for global data centers, a market where companies like NVIDIA are also seeing significant growth.
Optimistic outlook for fiscal 2027 and Q2
Looking ahead, Cisco provided an upbeat forecast for the second fiscal quarter and the full fiscal year 2027. For Q2 fiscal 2027, the company anticipates revenue between $18.0 billion and $18.2 billion. This figure comfortably exceeds the average analyst estimate of $17.88 billion compiled by LSEG.
Adjusted earnings per share for the second quarter are projected to be between $1.34 and $1.36. This also surpasses the market’s consensus estimate of $1.23. The guidance reflects strong anticipated operational performance and continued demand for Cisco’s offerings.
For the full fiscal year 2027, Cisco raised its revenue guidance to a range of $74.8 billion to $75.8 billion, up from the previous range of $72.2 billion to $73.4 billion. The market had estimated revenue of $73.15 billion. Adjusted EPS guidance was also increased to $5.47 to $5.53, from an earlier range of $5.05 to $5.11, outpacing the market estimate of $5.10.
These raised forecasts indicate that Cisco expects its strong momentum to continue throughout the fiscal year. The confidence stems from both its traditional networking business and the rapidly expanding AI infrastructure segment. The company’s strategic investments appear poised to deliver sustained returns.
Cisco’s position in the evolving AI market
Cisco’s impressive earnings and AI infrastructure projections underscore its pivotal role in the global shift towards artificial intelligence. While the company may have missed some of the early waves of generative AI, it is now rapidly making up ground. Its comprehensive portfolio, from networking hardware to security and observability solutions, positions it as a critical enabler of AI deployments for enterprises and hyperscalers alike.
The broader AI infrastructure market is experiencing explosive growth, with projections estimating significant expansion in the coming years. Cisco’s focus on providing integrated, secure, and scalable solutions directly addresses the complex needs of this market. Its collaboration with key players, such as NVIDIA, further solidifies its standing in the competitive landscape.
As organizations worldwide continue to invest heavily in AI capabilities, Cisco’s strategic direction and strong financial performance suggest it is well-positioned to capitalize on this transformative technological era. The company