ii view: Cisco growth rate hits 15-year high
Internet infrastructure equipment made by this Dow Jones company is increasingly used to process AI software. Buy, sell, or hold?
13th November 2026 15:58
by Keith Bowman from interactive investor
First quarter results to 30 September
- Revenue up 24% to $18.5 billion (£13.9 billion)
- Adjusted earnings up 40% to $1.40 per share
- Total shareholder returns of $3.7 billion
- Quarterly dividend of 42 US cents per share, unchanged from the previous quarter
Chief executive Chuck Robbins said:
“Organizations are turning to Cisco for our trusted, market-defining technology and our expertise to help them scale, secure and optimize their environments for the agentic AI era.
“We are in the very early stages of a multi-year networking supercycle, and we're confident in our ability to continue capturing the multi-billion-dollar opportunity it represents for Cisco.”
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ii round-up:
Cisco Systems Inc (NASDAQ:CSCO) has reported growth in sales and adjusted earnings at a 15-year high, with the maker of IT networking equipment also raising sales guidance for the year ahead.
First-quarter revenue up 24% to $18.5 billion (£13.9 billion) pushed adjusted earnings up 40% to $1.40 per share. A more than doubling in AI related demand from hyperscalers to around $9 billion now sees forecast sales for the year ahead of up to $75.8 billion. That’s up from a previous top-end estimate of $73.4 billion.
Shares in the Dow Jones and Nasdaq 100 company have fallen 5% having come into this news up by around a third so far in 2026. Rival Ciena Corp (NYSE:CIEN) is up by around a quarter over that time. The Dow Jones and Nasdaq 100 are up 9% and 12% respectively year-to-date.
Cisco makes what it describes as the critical infrastructure for the AI era. It highlighted broad-based demand during this latest quarter, with double-digit growth seen across all geographies and customer markets.
Networking equipment sales soared 43% from a year ago to $11.1 billion. Security related sales climbed 7% to $2.1 billion, with broad Service sales up 1% to $3.85 billion.
Operating expenses for the period of $5.14 billion fell from the prior quarter’s $5.2 billion. Sales growth of 24% accelerated from 18% in Q4 and 8% in Q3.
Share repurchases of $2 billion during the quarter sat alongside an unchanged dividend of $0.42 per share.
Second-quarter results are likely to be announced mid-February.
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 cyber security software providing networking firewalls, as well as collaboration and observability products. Geographically, the Americas generated most sales over its last financial year at 60%, with EMEA (Europe, Middle East, Africa) 26% and the rest of the world the balance of 14%.
For investors, a fall in the profit margin to 65.6% from the prior quarter’s 66.3% is not to be ignored, with management previously highlighting a current customer focus on lower margin equipment and away from higher margin software. A forward price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. A buildout of data centres could yet be slowed by the recent US midterm elections, while supply chain challenges have been previously highlighted.
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More favourably, exposure to AI infrastructure and demand from tech-titans such as Amazon.com Inc (NASDAQ:AMZN), Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT) is pushing double-digit growth in sales and earnings. A diversity of products and geographical locations exists. Growth via bolt-on acquisitions has included buying AI training and AI speech translation companies, while shareholder returns include share buybacks and a forecast dividend yield of 1.7%.
In all, and while risks remain, a consensus analyst fair value estimate above $135 per share implies ongoing optimism on Wall Street.
Positives:
- Product and geographical diversity
- Market leader
Negatives:
- Uncertain economic outlook
- Exposure to component supply chains
The average rating of stock market analysts:
Buy
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