Shares shifted sharply higher as Cisco Systems posted record fiscal third-quarter results that blew past Wall Street estimates and prompted management to dramatically lift its full-year outlook, fueling a rally that has pushed the stock up roughly 46% in 2026. Revenue hit $15.84 billion, beating the $15.56 billion consensus, while adjusted earnings of $1.06 per share topped the $1.04 forecast. Trading at €102.70 on the Frankfurt exchange — up 4.4% on the session — the stock continues to digest what may be Cisco's most consequential quarter in years.
AI Orders Are Surging, and Cisco Doubled Its Own Forecast
Cisco received $5.3 billion in AI infrastructure orders from hyperscalers year-to-date and raised its full-fiscal-year order target to $9 billion, nearly doubling the prior $5 billion estimate.
The company also lifted its AI revenue target to $4 billion from $3 billion. That kind of upward revision signals that demand from the biggest cloud companies — the firms building massive AI data centers — is accelerating faster than even Cisco anticipated. For shareholders, it means a larger and faster-growing revenue stream tied directly to the hottest spending cycle in tech.
The Guidance Raise Gives Investors Rare Earnings Visibility
Cisco now expects fiscal 2026 revenue of $62.8–$63.0 billion and GAAP earnings of $3.16–$3.21 per share.
Fourth-quarter guidance of $16.7–$16.9 billion in revenue blew past the $15.82 billion analysts expected. That gap between guidance and consensus is unusually wide, suggesting management sees demand strength persisting through summer.
Cisco Is Cutting Jobs to Fund Its AI Pivot
Alongside the beat, Cisco announced it is cutting fewer than 4,000 jobs — under 5% of its workforce.
The restructuring redirects investment toward its custom chips, optical components, security, and AI, with up to $1 billion in pre-tax charges. This is a classic "spend less on legacy, more on growth" move, but it also acknowledges that Cisco's older networking businesses alone won't drive the returns investors now expect.
The Risk: A Handful of Giant Customers Hold the Keys
Total product orders rose 35% year-over-year, but strip out hyperscalers and that figure drops to 19%. That gap highlights a concentration risk: if even one or two mega-customers slow orders, the headline growth rate could contract sharply. UBS noted Cisco "delivered on AI order strength while dodging a gross margin pothole,"
with non-GAAP gross margins at 66.0%, down from 68.6% a year ago — a sign that high-volume AI hardware is inherently less profitable than Cisco's traditional software-rich sales.