Cisco's Record Revenue Masks Warning on AI Infrastructure Economics

Cisco Systems reported record revenue and earnings for its fiscal fourth quarter, but the company's stock fell 4.6% after hours due to a warning that gross margin would compress on a heavier hardware mix.

The networking giant closed fiscal 2026 with a record $17.3 billion quarter, up 18% year-over-year, and non-GAAP earnings per share of $1.22, up 23%. However, the number that matters is hyperscaler AI infrastructure orders: $4 billion in the quarter and $9.3 billion for the year, roughly 4.5 times the prior year.

This is the clearest evidence yet that AI capex has moved past accelerators into the switching and optics layer, and also the most significant warning that the layer carries worse economics. The company's stock fell to around $118.18 in after-hours trading.