Cisco Beats Earnings with $4B AI Orders; Stock Falls 9.3% on Margin Pressure

Cisco reported record fiscal fourth-quarter revenue of $17.25 billion, up 18% year-over-year and above analyst expectations of $16.82 billion, with adjusted earnings of $1.22 per share exceeding the $1.17 consensus. The company booked $4 billion of AI infrastructure orders from hyperscalers in Q4 alone, bringing full-year fiscal 2026 AI orders to $9.3 billion—roughly 4.5 times fiscal 2025 levels—while guiding fiscal 2027 revenue to $18.0–$18.2 billion, well ahead of the $16.8 billion consensus. Despite these results, Cisco shares fell 9.3% to $112.41 late Thursday.

The decline reflects investor concern over profitability rather than demand. Adjusted gross margin contracted to 66.3% from 68.4% year-over-year, with product margin falling to 64.8% from 67.5%, as AI infrastructure orders are hardware-intensive and carry lower margins than software and services. Management expects first-quarter adjusted gross margin of 65–66%, below analyst expectations of approximately 66.1%, suggesting continued margin pressure despite robust demand.