Shares of Cisco Systems (NASDAQ:CSCO) edged lower in early U.S. trading even after the networking giant provided a stronger-than-expected first-quarter revenue forecast. The company also noted some impact from U.S. tariffs during its recently concluded fiscal year.
Cisco is seen as a potential winner amid rising corporate investments in artificial intelligence infrastructure, as companies look to scale up AI capabilities to meet surging demand. Industry heavyweights like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) are planning substantial AI-related spending, despite large outlays in recent quarters.
CEO Chuck Robbins reported that AI infrastructure orders in Cisco’s fiscal fourth quarter exceeded $800 million, pushing annual AI-related sales past $2 billion—more than double the company’s initial target.
Revenue for the quarter ending July 26 reached $14.67 billion, slightly above analyst expectations of $14.62 billion. Adjusted earnings per share came in at $0.99, ahead of the $0.98 consensus. However, executives said gross profit margins were modestly affected by U.S. tariffs on copper, steel, and aluminum, creating a “complex” operating environment.
Looking ahead, Cisco projects quarterly revenue of $14.65 billion to $14.85 billion, compared with prior estimates of $14.62 billion. For the 2026 fiscal year, the company expects adjusted EPS of $4.00 to $4.06 on revenue of $59 billion to $60 billion, slightly varying from analyst forecasts of $4.03 and $59.55 billion.
Analysts at Evercore ISI noted Cisco’s “strong AI momentum” but highlighted potential pressure points. Security business growth came in at 9% for the July quarter, falling short of expectations, while questions remain over whether networking expansion can maintain momentum through fiscal 2026 amid tougher year-on-year comparisons.