Cisco Q4 Earnings Review: Earnings Beat, Guidance Raised—So Why Is Cisco Stock Sliding?

Cisco Q4 2026 Earnings Review

Cisco Systems (CSCO) is the latest tech hardware company to post strong results, fueled by continued demand for artificial intelligence. However, the performance wasn’t enough to lift its stock.

Cisco reported adjusted earnings of $1.22 per share on $17.3 billion in revenue for the fiscal fourth quarter ended July 25, exceeding FactSet analyst expectations of $1.17 per share in earnings and $16.8 billion in revenue.

Key Earning highlights 

• Cisco reported record fiscal fourth-quarter revenue of approximately $17.3 billion, an 18% increase year over year. Non-GAAP earnings reached $1.22 per share, surpassing the consensus estimate of $1.17.

• Strong networking revenue and product orders, driven by demand for AI infrastructure, data-center switching and campus networking, helped fuel the results. Despite the earnings beat, Cisco’s shares declined as investors focused on margin pressures and the company’s ability to sustain its AI-driven growth.

• Management projected fiscal 2027 revenue of $72.2 billion to $73.4 billion and non-GAAP earnings of $5.05 to $5.11 per share—both above Wall Street expectations. Cisco also expects $7.5 billion in AI infrastructure revenue during fiscal 2027, following $9.3 billion in AI orders in fiscal 2026.

• Several analysts raised their price targets after the report. Wells Fargo increased its target to $150, Rosenblatt to $165 and Truist to $140, signaling continued confidence in Cisco’s long-term AI networking opportunity.

• Cisco also declared a quarterly dividend of $0.42 per share, payable October 21 to shareholders of record as of October 2. However, the dividend was not the primary catalyst for the stock’s movement.

• The strong results failed to overcome elevated investor expectations following Cisco’s rally in 2026. While analysts viewed the outlook as potentially conservative relative to current demand, investors questioned whether AI-related growth could continue accelerating at the necessary pace.

• Gross-margin concerns also weighed on the shares. Cisco’s expansion in AI networking could pressure profitability through product mix, pricing and higher investment requirements. Weaker than expected services revenue added to those concerns, which are particularly significant given the company’s elevated valuation.

AI Guidance

Cisco reported that AI infrastructure orders surged to $9.3 billion, up from $5.3 billion in the previous quarter.

However, the company said it will no longer provide an annual target for hyperscaler AI infrastructure orders. Instead, its fiscal 2027 outlook will focus on revenue, with Cisco projecting approximately $7.5 billion in hyperscaler AI infrastructure revenue up from about $4 billion in fiscal 2026.

Fiscal 2027 Guidance

For fiscal 2027, which begins with the October-ending quarter, Cisco forecast revenue of $72.2 billion to $73.4 billion, well above analysts’ estimate of $69.12 billion. The midpoint of the guidance range implies nearly 10% growth.

Citi analyst Atif Malik maintained a Buy rating on Cisco stock. He noted that Cisco raised its fiscal 2027 growth outlook to 15% year over year, supported by stronger AI-related sales and improved growth in non-AI businesses.

However, Malik also pointed to potential challenges, including flat order growth of 35% in the July quarter and an expected deceleration in networking revenue growth during fiscal 2027.

Job Cuts

In May, Cisco raised its forecast for fiscal 2026 AI-related orders to $9 billion, up from the previous estimate of $5 billion. At the same time, the company announced plans to eliminate roughly 4,000 jobs, or about 5% of its workforce.

Analysts Expectation Post Cisco Q4 Earnings

• KeyBanc analysts raised their price target for Cisco (CSCO) to $135, up from $130, while maintaining an Overweight rating.

• UBS raised its price target for Cisco Systems (CSCO) to $138 from $132 while maintaining a Buy rating. Cisco shares have gained nearly 80% over the past year, bringing the company’s market capitalization to approximately $452 billion.

• Truist Securities raised its price target for Cisco (CSCO) to $140, up from $125, while maintaining a Buy rating.

• Wells Fargo maintained an Overweight rating on Cisco (NASDAQ: CSCO) and raised its price target to $150, up from $130.

SHARIAH Compliance Metrics of Cisco (CSCO)

CSCO qualifies all three Musaffa Shariah screening parameters based on AAOIFI methodology as of Q3 2026 report.

• Business Activity 97.52% Halal, Doubtful is 1.11%, and non-Halal is 1.37%.

• Interest-bearing securities and assets = 9.34% (Shariah-complaint is < 30%).

• Interest-bearing debt = 12.81% (Shariah-complaint is < 30%).

You can get a more detailed breakdown of CISCO's Shariah status on its stock page.