Cisco Shares Plummet 8% Amid Margin Compression Concerns
Cisco shares plummeted by around 8% on Thursday after releasing its fourth-quarter fiscal 2026 financial results. Despite beating both revenue and earnings estimates, investors' concerns over margin compression led to a decline in stock price from $134.23 to premarket levels near $116.80.
The company reported revenue of $17.25 billion for the quarter ended July 2026, surpassing analyst estimates of $16.82 billion. Adjusted earnings per share came in at $1.22, exceeding the consensus expectation of $1.17. However, gross margin contracted to 66.3% for the quarter, down from 68.4% in the same period last year.
Chairman and CEO Chuck Robbins emphasized that the next phase of enterprise AI will not be defined by cloud migration alone, but by companies bringing more AI infrastructure into their own data centers. Cisco believes on-premise AI infrastructure will become an important option for enterprise customers as they look to optimize both business value and cost of AI.