Cisco Systems Inc. projected $7.5 billion in AI data center sales for fiscal year 2027, representing about 10% of its total revenue forecast of $72.2 billion to $73.4 billion. Despite beating fourth-quarter expectations with $17.25 billion in revenue and issuing strong guidance, Cisco's stock fell up to 9% as investors focused on a conservative outlook relative to $9.3 billion in full-year AI orders. High expectations were already priced in after a 60% stock rally in 2026, while a hardware-heavy product mix pressured gross margins.
AI data center revenue forecast
- ▪Cisco Systems Inc.'s projected $7.5 billion in artificial intelligence revenue for fiscal year 2027 represents nearly double the $4 billion in revenue generated from hyperscalers in the prior fiscal year
- ▪The projected $7.5 billion in artificial intelligence sales will make up approximately 10% of Cisco Systems Inc.'s projected total revenue for fiscal year 2027
- ▪Cisco Systems Inc. projected $7.5 billion in sales tied to the artificial intelligence data center boom for fiscal year 2027
Hyperscaler infrastructure orders
- ▪Hyperscale cloud providers placed $4 billion of artificial intelligence infrastructure orders with Cisco Systems Inc. in the fourth fiscal quarter ended July 25, 2026
- ▪Cisco Systems Inc. accumulated a total of $9.3 billion in artificial intelligence-related infrastructure orders from hyperscalers over the full fiscal year ended July 25, 2026
Stock price decline
- ▪Cisco Systems Inc. shares fell over 4% in extended trading on Wednesday, August 12, 2026, after initially rising 3% following the earnings release
- ▪Cisco Systems Inc. shares dropped 9% on Thursday, August 13, 2026, trading around $113, despite beating fourth-quarter earnings and revenue estimates
Investor expectations already priced in
- ▪Jake Behan of Direxion stated that the market treated Cisco Systems Inc.'s strong earnings results as confirmation of the artificial intelligence infrastructure story rather than a new catalyst
- ▪Prior to the earnings release, Cisco Systems Inc. shares had risen more than 60% in 2026, driven by investor optimism regarding the company's role in the artificial intelligence boom
Margin pressure from hardware mix
- ▪Cisco Systems Inc. forecast its first-quarter adjusted gross margin to be between 65% and 66%, slightly below the average market estimate of 66.10%
- ▪Joe Tigay of the Rational Equity Armor Fund stated that Cisco Systems Inc.'s margins are tight due to a more hardware-intensive product mix and elevated component costs
Fiscal 2027 revenue guidance
- ▪Cisco Systems Inc. projected revenue for the first quarter of fiscal year 2027 to be between $18 billion and $18.2 billion, topping the average estimate of $16.8 billion
- ▪Cisco Systems Inc.'s fourth-quarter revenue increased approximately 18% year-over-year to $17.25 billion, beating analyst estimates of $16.82 billion
- ▪Cisco Systems Inc. forecast fiscal year 2027 revenue to be between $72.2 billion and $73.4 billion, exceeding the average analyst estimate of $68.69 billion
Story comments
Loading comments…