ii view: AI infrastructure maker Cisco breaks records
This Dow Jones company has experienced a doubling in its share price over the last five years. Analyst Keith Bowman assesses prospects.
13th August 2026 15:15
by Keith Bowman from interactive investor
The Cisco stand at a past Mobile World Congress (MWC) in Barcelona. Photo: Joan Cros/NurPhoto via Getty Images.
Fourth-quarter results to 30 June
- Revenue up 18% to $17.3 billion (£12.8 billion)
- Adjusted earnings up 23% to $1.22 per share
- Quarterly dividend of 42 US cents per share, unchanged from the previous quarter
Chief executive Chuck Robbins said: “We delivered a very strong close to fiscal 2026, marking another record year for Cisco. Our record performance is a testament to the accelerated pace of innovation and the excellent execution by our teams.”
- Invest with ii: Buy US Stocks & Shares | US Earnings Season | Interactive investor Offers
ii round-up:
Cisco Systems Inc (NASDAQ:CSCO) detailed record fourth-quarter sales and earnings, with the maker of IT networking equipment reporting sales for the current quarter to late September that surpassed Wall Street estimates.
Sales for the fourth quarter to late June rose by close to fifth to $17.3 billion (£12.8 billion), fuelling a near one-quarter rise in adjusted earnings to $1.22 per share. Ongoing strong demand from hyperscalers is expected to generate current first-quarter sales of up to $18.2 billion. Analysts had forecast Q1 sales of nearer to $17 billion.
Shares in the Dow Jones and Nasdaq 100 company fell 7% in post-results US trading having come into these latest results up by around 60% so far in 2026. Shares for rival Motorola Solutions Inc (NYSE:MSI) are up by just over a fifth during that time. The Dow and Nasdaq 100 indexes are up 12% and 18% respectively year-to-date.
Cisco makes what it describes as the critical infrastructure for the AI era. Demand from hyperscalers such as Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) rose 4.5 times during this latest financial year to late June compared to the previous year.
Cisco estimates revenues for the current financial year ahead of between $72.2 billion to $73.4 billion, pushing adjusted earnings of up to $5.11. That’s potentially up from outcomes of $63.3 billion and $4.33 per share over this latest fiscal year just ended.
Cisco pointed to what it believes is a networking ‘super cycle’ taking place. Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares after the results, upping its estimated fair value share price estimate to $135 from a previous $130.
First-quarter results are likely to be announced mid-November.
ii view:
Started in 1984, Cisco today employs over 80,000 people. As well as networking equipment, much of which is made by outsourced manufacturers, it also sells cybersecurity software providing networking firewalls. Geographically, the Americas generated most sales during this latest financial year at 60%, with EMEA (Europe, Middle East, Africa) 26% and the rest of the world the balance of 14%.
For investors, management comments referencing slight profit margin pressure in the current first quarter given the focus on lower-margin equipment and away from higher-margin software is not to be ignored. Forecast sales and earnings growth for the year ahead of 15% and 17% represent slowdowns from that achieved in 2026. Supply chain challenges have been previously highlighted, while an estimated price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap.
- The stocks most fund managers won’t bet against
- Bill Ackman’s buys: six stocks enter the Pershing Square portfolio
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
On the upside, exposure to AI-required infrastructure and demand from hyperscalers is generating double-digit growth in sales and earnings. The company has both diversity in products and geographical locations. Previous acquisitions to enhance growth have recently included AI training and AI speech translation companies NeuralFabric and EzDubs, while shareholder returns include both a $3.2 billion Q4 share buyback and a forecast dividend yield of 1.3%.
On balance, and despite ongoing risks, expected demand for AI-required infrastructure is likely to keep fans of this major networking company optimistic for the long term.
Positives:
- Product and geographical diversity
- Market leader
Negatives:
- Uncertain economic outlook
- Exposure to component supply chains
The average rating of stock market analysts:
Buy
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.