# Cisco Systems (CSCO) Sector: Networking equipment | Field | Value | |---|---| | Price | $98.65 | | Market cap | $389B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2026-11-12 (confirmed) | Analysts: Leaning bullish Picks: Research only Discount category: Close to intrinsic value ## In short The market doubts that Cisco's AI and campus networking upturn will last and fears lower margins, and steady orders with stable gross margin through fiscal 2027 can close the gap. ## Themes and gap - Themes: AI supplier (ai-supplier), Tariffs and trade (trade-tariffs) - Gap type: Can close (closable) - Why: The Q1 fiscal 2027 report on November 12, 2026 and the next quarterly reports show whether orders and gross margin hold. ## About Cisco Systems makes networking equipment and software: switches, routers, wireless products and optics, plus security, collaboration and observability products. It also sells technical support and professional services. Its customers are businesses of all sizes, governments, service providers and hyperscalers. Its fiscal year ends in late July. Revenue was $63.3 billion in fiscal 2026, which ended on July 25, 2026. Product revenue grew 24% in Q4 fiscal 2026, and Networking product revenue grew 28%. Hyperscalers that buy AI infrastructure gave about 6% of revenue in fiscal 2026, up from less than 2% in fiscal 2025. ## Thesis The market doubts that the current demand for Cisco networking will last, and it fears lower margins. Total product orders grew 35% in Q4 fiscal 2026, networking orders grew 40%, and AI infrastructure orders from hyperscalers reached $9.3 billion in fiscal 2026. But much of this demand comes from a few hyperscalers that buy in large and irregular amounts and can design their own equipment. Higher memory costs and the mix of products lowered the non-GAAP gross margin to 66.3% in Q4 fiscal 2026 from 68.4% a year earlier. Inventory rose to $5.7 billion from $3.2 billion. The market treats the strong orders as the peak of a cycle. For the gap to close, three things must be true. Cisco must reach its fiscal 2027 guidance of $72.2 billion to $73.4 billion in revenue and $5.05 to $5.11 in non-GAAP EPS. The non-GAAP gross margin must stay in the guided range of 65% to 66%. AI infrastructure revenue from hyperscalers must reach the expected $7.5 billion in fiscal 2027, while the campus refresh and security keep growing. The Q1 fiscal 2027 report on November 12, 2026 gives the next test. If orders and margins hold, the gap can close over the next four to six quarters. If hyperscaler orders fall or memory costs rise more, the gap can last longer. ## Checkpoints - Nov 12, 2026: Q1 fiscal 2027 results: margins and AI orders. Status: Pending. Watch: Revenue of $18.0 billion to $18.2 billion or more, a non-GAAP gross margin of at least 65% and a confirmed fiscal 2027 guidance pass; a gross margin below 65% or lower guidance fail. - Aug 2027 (estimate): Fiscal 2027 AI infrastructure revenue. Status: Pending. Watch: AI infrastructure revenue from hyperscalers of about $7.5 billion or more in fiscal 2027 passes; a large shortfall fails. ## Balance sheet - Cash: $15.9B - Debt: $29.7B - Net debt: $13.8B - Interest cover: 10× - Undrawn credit line: $5.0B, to February 2029 - Debt due within 12 months: $10.2B - Last debt due: 2064 Cisco funds itself with senior fixed-rate notes and commercial paper. At July 25, 2026, the principal of senior notes was $23.0 billion, with maturities from 2026 to 2064, and commercial paper was $6.7 billion, up from $3.5 billion a year earlier. Short-term debt on the balance sheet was $10.2 billion. Cash, cash equivalents and investments were $15.9 billion. The $5.0 billion revolving credit agreement of February 2, 2024 runs for five years and had no borrowings. Interest cover is GAAP operating income of $15.4 billion divided by interest expense of $1.47 billion for fiscal 2026. Operating cash flow was $14.2 billion in fiscal 2026, flat from fiscal 2025, because inventories rose by $2.5 billion and financing receivables by $1.8 billion. Capital spending was $1.4 billion. Cisco paid $6.6 billion in dividends and bought back $6.1 billion of its shares in fiscal 2026, and $8.1 billion of buyback authorization is left. As of 2026-07-25. Sources: - https://www.sec.gov/Archives/edgar/data/858877/000085887726000106/exhibit991pressrelease-q4f.htm - https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm ## Dividends - Dividend yield: 1.7% (last 12 months, at the current price) - Paid per share, last 12 months: $1.67 (4 payments) - Current annual rate: $1.68 ($0.42 x 4 a year) - Payout ratio: 50% of the earnings of the last fiscal year (the year ended 2026-07-25) - Latest ex-dividend date: 2026-10-02, $0.42 per share - Growth over the last 5 years: 2.6% a year - Growth over the last 10 years: 5.4% a year Dividends per share by year: 2016: $0.99, 2017: $1.13, 2018: $1.28, 2019: $1.38, 2020: $1.43, 2021: $1.47, 2022: $1.51, 2023: $1.55, 2024: $1.59, 2025: $1.63. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-11-03: Cisco said that it will report Q1 fiscal 2027 results after the market closes on November 12, 2026, with a call at 1:30 p.m. PT. - 2026-08-12: Cisco reported Q4 fiscal 2026 results. Revenue grew 18% to $17.3 billion, and non-GAAP EPS grew 23% to $1.22. Product orders grew 35%, and AI infrastructure orders from hyperscalers were $4 billion in the quarter and $9.3 billion in fiscal 2026. The non-GAAP gross margin fell to 66.3% from 68.4%. Cisco guided fiscal 2027 revenue of $72.2 billion to $73.4 billion and non-GAAP EPS of $5.05 to $5.11, and it expects $7.5 billion of AI infrastructure revenue from hyperscalers. In the quarter it bought Galileo Technologies and Astrix Security. - 2026-05-13: Cisco reported Q3 fiscal 2026 results. Revenue grew 12% to a record $15.8 billion, and non-GAAP EPS grew 10% to $1.06. It raised its expected fiscal 2026 AI infrastructure orders from hyperscalers to $9 billion from $5 billion. It also announced a restructuring plan with pre-tax charges of up to $1 billion, mostly cash, to move spending to silicon, optics, security and AI. - 2026-02-11: Cisco reported Q2 fiscal 2026 results. Revenue grew 10% to $15.3 billion, and non-GAAP EPS grew 11% to $1.04. Product orders grew 18%, and AI infrastructure orders from hyperscalers were $2.1 billion. It raised its quarterly dividend by 2% to $0.42 per share. ## Latest news and filings - Last earnings: 2026-08-12 (8-K: https://www.sec.gov/Archives/edgar/data/858877/000085887726000106/) - Next earnings: 2026-11-12 (confirmed by the company) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-10-09 | 8-K | Change of directors or officers | | csco-20261007 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000156/csco-20261007.htm | | 2026-09-02 | 10-K | Annual report for the period ended Jul 25, 2026 | 2026-07-25 | csco-20260725 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000132/csco-20260725.htm | | 2026-08-12 | 8-K | Earnings release | | csco-20260812 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000106/csco-20260812.htm | | 2026-05-19 | 10-Q | Quarterly report for the period ended Apr 25, 2026 | 2026-04-25 | csco-20260425 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000078/csco-20260425.htm | | 2026-05-13 | 8-K | Earnings release and Exit or restructuring costs | | csco-20260513 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000075/csco-20260513.htm | | 2026-05-01 | 8-K | Change of directors or officers | | csco-20260427 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000057/csco-20260427.htm | | 2026-04-06 | 8-K | Change of directors or officers | | csco-20260331 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000048/csco-20260331.htm | | 2026-02-17 | 10-Q | Quarterly report for the period ended Jan 24, 2026 | 2026-01-24 | csco-20260124 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000021/csco-20260124.htm | | 2026-02-11 | 8-K | Earnings release | | csco-20260211 | https://www.sec.gov/Archives/edgar/data/858877/000085887726000006/csco-20260211.htm | | 2025-12-17 | 8-K | Change of directors or officers and Shareholder vote results | | csco-20251216 | https://www.sec.gov/Archives/edgar/data/858877/000085887725000199/csco-20251216.htm | Every filing on SEC EDGAR (CIK 858877): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000858877&type=&dateb=&owner=include&count=40 ## Risks - High: Memory costs and the mix of products lower margins. The non-GAAP product gross margin fell to 64.8% in Q4 fiscal 2026 from 67.5%, and Cisco expects higher costs of memory to continue to hurt it. - Medium: AI infrastructure sales go to a few hyperscalers that buy in large and irregular amounts. These customers can design their own equipment, so orders can fall fast. - Medium: Inventory rose to $5.7 billion at July 25, 2026 from $3.2 billion, and purchase commitments for Cisco Silicon One and memory also rose. If demand falls, Cisco can have write-downs and losses on these commitments. - Low: Commercial paper rose to $6.7 billion from $3.5 billion a year earlier, and debt is above cash. Tariffs and trade policy also affect costs, and Cisco includes the estimated tariff impact in its guidance. ## Links - Page: https://picks.utilarium.app/company/CSCO/ - History of changes: https://picks.utilarium.app/company/CSCO/history/ - JSON with full history: https://picks.utilarium.app/data/company/CSCO.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.