Cisco Stock Falls 7% on Margin Concerns Despite Strong AI-Driven Earnings Beat
Cisco Systems reported fiscal Q4 2026 earnings that beat analyst estimates, with revenue of $17.25 billion (up 18% YoY) and adjusted EPS of $1.22. AI infrastructure orders from hyperscalers surged to $9.3 billion for the fiscal year. However, shares dropped 7% due to gross margin compression to 66.3%, attributed to a shift toward lower-margin AI hardware. Despite this, multiple analysts raised price targets, citing robust guidance for fiscal 2027 revenue of $72.2-$73.4 billion and continued AI momentum.
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Cisco Drops 7% on Gross Margin Fears Despite Strong Earnings; Five Firms Raise Price Targets
Cisco Systems shares fell 7% to $115 on Thursday after reporting fiscal Q4 2026 results that beat earnings and revenue expectations but revealed gross margin compression to 66.3% from 68.4% a year earlier, driven by lower-margin AI hardware mix. Non-GAAP EPS of $1.22 exceeded the $1.17 consensus, and revenue rose 18% year-over-year to $17.3 billion. AI infrastructure orders totaled $4 billion in the quarter and $9.3 billion for the full fiscal year. Despite the margin concerns, five analyst firms raised their price targets on Cisco, including Rosenblatt to $165 and Wells Fargo to $150, citing robust guidance and strong enterprise and hyperscaler AI momentum. Cisco guided Q1 FY2027 revenue of $18-18.2 billion (above $16.83B consensus) and full-year FY2027 revenue of $72.2-73.4 billion with $7.5 billion in AI infrastructure revenue.
Cisco Drops 7% on Gross Margin Fears; Five Firms Raise CSCO Price Target
Cisco Systems shares fell 7% to $115 after fiscal Q4 2026 results showed gross margin compression to 66.3%, overshadowing an EPS beat ($1.22 vs $1.17 consensus) and 18% revenue growth to $17.3 billion. The margin decline is attributed to a shift toward lower-margin AI hardware. Despite this, five analyst firms raised their price targets, citing strong AI infrastructure orders ($9.3 billion in FY2026, $7.5 billion projected for FY2027) and robust enterprise spending. Guidance for Q1 FY2027 revenue ($18-18.2 billion) and full-year FY2027 revenue ($72.2-73.4 billion) exceeded consensus. The stock had gained 63% year-to-date before the drop.
Cisco Q4 2026 Earnings Beat Sends Stock Lower After Hours
Cisco reported fourth-quarter fiscal 2026 earnings on Wednesday that beat analyst expectations, with revenue of $17.25 billion (above the $16.82 billion consensus) and adjusted EPS of $1.22 (above the $1.17 estimate). Despite the beat, Cisco stock fell in after-hours trading. Revenue grew 18% year-over-year, and GAAP net income jumped 51% to $3.9 billion. A key highlight was AI-related demand from hyperscalers, which placed $4 billion in orders in Q4 alone, bringing their fiscal 2026 total to $9.3 billion. Total product orders rose 35% year-over-year, with networking orders up 40% for the eighth straight quarter of double-digit growth. Guidance for Q1 fiscal 2027 ($18-18.2 billion revenue) and full fiscal 2027 ($72.2-73.4 billion revenue) came in well above analyst estimates. Cisco also declared a quarterly dividend of $0.42 per share and returned $3.2 billion to shareholders via buybacks and dividends.
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Cisco Systems Q4 Fiscal 2026 Earnings Call Highlights
Cisco Systems reported record fourth-quarter and full-year fiscal 2026 results, driven by surging demand for AI infrastructure, networking, security, and collaboration products. Q4 revenue rose 18% year-over-year to $17.3 billion, with non-GAAP EPS up 23% to $1.22. Full-year revenue reached $63.3 billion, up 12%. Hyperscale AI infrastructure orders hit $9.3 billion for the fiscal year, roughly 4.5 times the prior year, with $4 billion in Q4 alone. Product orders surged 35% in Q4, led by a 95% increase from service provider and cloud customers. CEO Chuck Robbins cited a multiyear networking 'super cycle' tied to AI deployment. For fiscal 2027, Cisco forecast revenue of $72.2-$73.4 billion and non-GAAP EPS of $5.05-$5.11. The company returned $12.7 billion to shareholders in fiscal 2026 via dividends and buybacks.
Cisco Stock Falls Despite Earnings and Revenue Beat on AI Optimism
Cisco Systems reported fiscal fourth-quarter earnings that topped analyst estimates, with adjusted earnings per share of $1.22 versus $1.17 expected and revenue of $17.25 billion versus $16.82 billion expected. The company also issued a strong revenue forecast for the current quarter of $18 billion to $18.2 billion, well above the $16.8 billion average estimate. Despite the better-than-expected results, Cisco's stock dropped in extended trading on Wednesday. The decline came after Wall Street had pushed the stock up more than 60% this quarter on optimism about Cisco's role in the AI boom. The company reported that hyperscalers placed $4 billion in infrastructure orders in the quarter, totaling $9.3 billion for the fiscal year. Cisco expects revenue from hyperscalers to nearly double in fiscal 2027 to $7.5 billion. Overall revenue climbed 18% year-over-year to $17.25 billion, while net income surged 51% to $3.9 billion.