Cisco Shares Surge 8% After Raising Fiscal 2026 Revenue Outlook Amid Growing AI Demand
Cisco shares rose 8% in late trading on Wednesday following an upward revision of the company’s fiscal 2026 revenue outlook. According to its Q3 earnings report, Cisco now expects revenue between $60.2 billion and $61 billion. Executives attributed the revised forecast to stronger demand for AI-ready networking systems.
The company acknowledged that its earlier forecast had fallen short by nearly $1 billion. The updated revenue guidance surpasses Wall Street expectations, building on Cisco’s recent outperformance of revenue and earnings targets in the second quarter.
Fiscal 2026 Adjusted Earnings Forecast Exceeds Analyst Projections
Cisco also anticipates adjusted earnings of $4.14 per share for fiscal 2026, exceeding the $4.05 per share projected by analysts. The rise in demand for secure and fast networking solutions comes as businesses accelerate AI upgrades across data centers, cloud infrastructures, and enterprise networks.
AI Orders on the Rise as Cisco Enhances Partnerships and Hardware
During a conference call with analysts, CEO Chuck Robbins highlighted that Cisco expects its AI pipeline to gain momentum in the second half of fiscal 2026. He noted that customers are moving swiftly to deploy AI systems, making network security increasingly critical as workloads grow.
Recent data showed AI infrastructure orders reaching $1.3 billion, up from $800 million in the previous quarter. Cisco is actively redesigning chips and routing systems to support heavier AI traffic, with upgrades aimed at connecting large server racks used for advanced training models and other compute-intensive tasks.
Competitive Landscape and Strategic Partnerships
Cisco faces competition from Broadcom and Hewlett Packard Enterprise (which owns Juniper Networks). However, it leverages a strategic partnership with Nvidia to maintain an edge in developing AI-optimized network equipment.
Strong Q1 Performance and Optimistic Q2 Outlook
For the fiscal first quarter ending October 25, Cisco reported revenue of $14.9 billion, marking an 8% increase year-over-year. Profit came in at $1 per share, excluding certain items, beating analyst estimates of $14.8 billion in revenue and 98 cents earnings per share.
Looking ahead to the fiscal second quarter ending in January, Cisco expects revenue between $15 billion and $15.2 billion, surpassing the $14.7 billion forecast by analysts. The company also projects earnings of $1.02 per share, compared to the predicted 99 cents.
Analyst Insights and Outlook
Bloomberg Intelligence analyst Woo Jin Ho noted that Cisco’s AI momentum remains strong. He described the company’s raised forecast as still cautious, with potential for additional upside if demand continues to accelerate.
Cisco CFO Mark Patterson emphasized ongoing demand for updated networking equipment, highlighting a multi-year campus refresh cycle gaining traction among large customers.
Expansion through Security, Training, and AI-Powered Development
Beyond hardware, Cisco is broadening its product offerings via security and observability tools. A major move came in 2024 with the $28 billion acquisition of Splunk, which CEO Chuck Robbins has described as part of a strategy to reduce reliance on hardware cycles while expanding Cisco’s software business.
Internally, Cisco is encouraging employees to adopt AI tools to boost productivity rather than cut jobs. Robbins told CNBC he prefers to keep engineers and focus on faster innovation and enhanced efficiency—a stance that contrasts with companies like Amazon, Microsoft, and Accenture, which have implemented layoffs amid automation trends.
According to Chief Information Officer Fletcher Previn, about 70% of Cisco’s 20,000 developers use AI coding tools such as Cursor, Windsurf, and GitHub Copilot at least monthly. AI-generated code now represents nearly 25% of all internally produced code, up significantly from 4% the previous year.
Global head of talent acquisition Scott McGuckin told Fortune that managers actively leveraging AI encourage their teams to do the same, leading to higher creativity, productivity, and strategic thinking. McGuckin said, “While I haven’t placed any mandatory AI training on my immediate team, I highly expect them to be taking advantage of the AI tools and courses available in the company.”
Cisco Shares Outperform Market in 2024
As of Wednesday’s closing, Cisco shares were up 25% for the year, outperforming the Nasdaq’s 21% gain.
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