Cisco (CSCO) Stock; Edges Lower Despite $2.1B AI Infrastructure Orders
TLDRs;
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Cisco shares drop 7% despite beating Q4 revenue and profit expectations.
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Cisco secures $2.1B in AI infrastructure orders, including Nvidia-powered switches and Saudi projects.
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Growth is driven by hyperscale cloud providers, while enterprise, security, and services lag.
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Cisco’s Saudi AI venture is a long-term strategic investment with minimal near-term revenue impact.
Shares of Cisco Systems (CSCO) fell roughly 7% in after-hours trading following the company’s quarterly earnings report, even as the tech giant surpassed analyst revenue and profit expectations.
The decline reflects cautious investor sentiment, with guidance matching estimates and some business segments showing softness despite strong performance in core networking and AI infrastructure.
Cisco Systems, Inc., CSCO
Strong Earnings Offset by Modest Guidance
For the quarter, Cisco reported revenue of US$15.4 billion, beating analyst estimates of $15.1 billion and marking a 10% increase from the prior year. Net income rose to $3.2 billion, up from $2.4 billion a year ago, fueled by robust demand in the company’s networking business.Core networking sales surged 21% to $8.3 billion, reflecting steady adoption by enterprise and cloud customers alike.
Despite the strong results, the stock slid after hours as Cisco’s revenue guidance for the next quarter of $15.4–15.6 billion met, but did not exceed, investor expectations. Analysts suggest that this cautious outlook has contributed to short-term market pressure.
AI Orders and New Hardware Drive Growth
Cisco highlighted $2.1 billion in AI infrastructure orders, driven by growing demand for AI-ready networking and computing hardware. The company also announced a new switch featuring an Nvidia chip, alongside plans to collaborate with AMD on a major AI infrastructure project in Saudi Arabia.
CEO Chuck Robbins emphasized that while these initiatives are promising, the Saudi Arabia venture is a long-term strategic investment, with no immediate expectation for meaningful contribution to FY26 revenue. The project aims to deliver up to 1 gigawatt of AI computing capacity by 2030, beginning with a 100 MW deployment, positioning Cisco as a key player in sovereign AI infrastructure initiatives.
Hyperscale Cloud Providers Drive Momentum
Much of Cisco’s revenue growth came from hyperscale cloud customers, with product orders in the service provider and cloud segment rising 65% year-over-year. In contrast, enterprise orders increased only 8%, indicating slower expansion outside large-scale cloud operators.
Other areas showed mixed performance. The security division declined 4%, impacted by older product cycles and shifts from on-premise to cloud-based offerings, such as Splunk subscriptions. Services revenue slipped 1%, with Annualized Recurring Revenue (ARR) up only 3%, signaling modest recurring growth.
Long-Term Vision for Sovereign AI
Cisco’s Saudi Arabia initiative reflects a broader strategy to support national AI computing ambitions beyond traditional US hyperscalers. The company highlighted a gap in regional AI infrastructure, seeking to establish itself as a foundational partner for government-led AI projects.
While investors may be focused on near-term returns, Cisco frames the initiative as a purely strategic upside rather than a core driver of FY26 revenue guidance. CEO Robbins noted that these sovereign AI deployments are expected to complement rather than define the company’s growth trajectory over the next several years.
Bottom Line:
Cisco’s quarterly earnings show solid performance, with AI infrastructure orders and networking sales driving optimism. However, cautious guidance and mixed performance across business lines contributed to a modest 7% dip in after-hours trading. Investors will likely monitor the company’s execution in AI initiatives and hyperscale cloud demand as key growth indicators moving forward.
The post Cisco (CSCO) Stock; Edges Lower Despite $2.1B AI Infrastructure Orders appeared first on CoinCentral.
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