Cisco Systems (NASDAQ:CSCO) reported strong fiscal first-quarter results for 2027, with revenue hitting an all-time high of $18.5 billion, up 24% year over year. Adjusted net income also surged 39% to $5.6 billion, exceeding analyst estimates. CEO Chuck Robbins highlighted the company's role in the AI era, noting a multi-year networking supercycle driven by AI compute capacity build-outs. Management raised full-year revenue guidance to $74.8 billion to $75.8 billion, up from previous forecasts.
Despite these positives, investors focused on concerns such as a sequential decline in product orders and a drop in adjusted gross margin to 65.6% from 68.1%. CFO Mark Patterson mentioned anticipated challenges in the second half of the fiscal year. Additionally, the fallout from the Nvidia scandal involving CEO Jensen Huang's departure added uncertainty, despite no immediate changes at Nvidia.
The stock fell over 6% on Friday, contrasting with the earnings beat. Analysts noted that while order growth slowed, the long-term outlook for AI-driven networking remains robust. The reaction seemed to overshadow the strong fundamentals and guidance raise, presenting a potential buying opportunity for long-term investors.