Cisco's Revenue Growth Masks Profit Decline Concerns

Cisco released its financial results for the fourth quarter and full fiscal year 2026, exceeding Wall Street's expectations. Revenue reached $17.3 billion, up 18% year on year, while non-GAAP earnings per share stood at $1.22.

The company secured $4 billion in AI infrastructure orders, bringing the full-year total to $9.3 billion, exceeding its raised target of $9 billion.

Cisco's management attributes the 'network supercycle' to hyperscale data centers building large-scale GPU clusters and enterprise campus network devices entering replacement windows.

However, there are concerns beneath the impressive figures. Non-GAAP product gross margin decreased by 270 basis points year on year to 64.8%, mainly due to strong bargaining power of hyperscale manufacturers and high costs of chips and optical components.