Cisco's Best Quarter in Decade Masks Dependency on Competitor Chips

Cisco Systems Inc (NASDAQ: CSCO) had its best quarter in a decade, but the growth comes from customers who are also its biggest competitors. In the fourth quarter of fiscal year 2026, Cisco booked $17.3 billion in revenue and $4.9 billion in non-GAAP net income, with total product orders up 35% year over year.

The majority of these orders came from hyperscalers, companies that can design their own switches and employ silicon teams to insource components. Hyperscaler business carries thinner margins than enterprise campus networking, diluting the blended margin despite accelerating top-line growth.

Cisco has tied itself to Nvidia by becoming the only partner silicon supported in Nvidia's Spectrum-X Ethernet architecture. This arrangement means customers get either Cisco Silicon One or Nvidia-based switches under one operating model, a smart commercial accommodation but also a dependency on a competitor's chips.