- Company name
- Cisco Systems
- Sector
- Networking equipment
- 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. In Q1 fiscal 2027, which ended on October 24, 2026, revenue was a record $18.5 billion, product revenue grew 32%, and Networking product revenue grew 43%. 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. Revenue grew 24% to a record $18.5 billion in Q1 fiscal 2027, and Networking product revenue grew 43%. Cisco now expects $9 billion of AI infrastructure revenue from hyperscalers in fiscal 2027, more than double the total for 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. The non-GAAP gross margin fell to 65.6% in Q1 fiscal 2027 from 68.1% a year earlier, and inventory rose to $6.4 billion at October 24, 2026 from $5.7 billion at July 25, 2026. The market treats the strong demand as the peak of a cycle. For the gap to close, three things must be true. Cisco must reach its raised fiscal 2027 guidance of $74.8 billion to $75.8 billion in revenue and $5.47 to $5.53 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 $9 billion in fiscal 2027, while the campus refresh and security keep growing. The Q2 fiscal 2027 report, which Cisco has not dated yet, gives the next test. If revenue 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.
- Risks
- Memory costs and the mix of products lower margins. The non-GAAP product gross margin fell to 63.7% in Q1 fiscal 2027 from 67.2% a year earlier. In August 2026, Cisco said that it expects higher costs of memory to continue to hurt it.
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.
Inventory rose to $6.4 billion at October 24, 2026, from $5.7 billion at July 25, 2026 and $3.2 billion a year before that. Purchase commitments for Cisco Silicon One and memory also rose in fiscal 2026. If demand falls, Cisco can have write-downs and losses on these commitments.
Commercial paper was $6.7 billion at July 25, 2026, up 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.
- Balance sheet
- Cash: $15.8B
Debt: $29.8B
Net debt: $14.0B
Interest cover: 15×
Undrawn credit line: $5.0B, to February 2029
Debt due within 12 months: $10.4B
Last debt due: 2064
Cisco funds itself with senior fixed-rate notes and commercial paper. At October 24, 2026, cash and cash equivalents were $7.8 billion and investments were $8.1 billion, a total of $15.8 billion. Short-term debt was $10.4 billion and long-term debt was $19.4 billion. In Q1 fiscal 2027, Cisco issued $5.2 billion of debt, repaid $6.0 billion and added $1.1 billion of net short-term borrowings. The 10-K listed $23.0 billion of senior notes with maturities to 2064 and $6.7 billion of commercial paper at July 25, 2026. The $5.0 billion revolving credit agreement of February 2, 2024 runs for five years and had no borrowings at that date. Interest cover is GAAP operating income of $5.6 billion divided by interest expense of $368 million for Q1 fiscal 2027. Operating cash flow was $4.4 billion in Q1, up 36%, and capital spending was $502 million. Cisco paid $1.65 billion in dividends and bought back $2.0 billion of its shares in the quarter, and $6.1 billion of buyback authorization is left.
As of Oct 24, 2026.
- Checkpoints
- Nov 12, 2026: Q1 fiscal 2027 results: margins and AI orders. Passed. 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. Outcome: Revenue was a record $18.5 billion, the non-GAAP gross margin was 65.6%, and Cisco raised its fiscal 2027 guidance.
Feb 12, 2027 (estimate): Q2 fiscal 2027 results: revenue and gross margin. 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. Pending. Watch: AI infrastructure revenue from hyperscalers of about $9 billion or more in fiscal 2027 passes; a large shortfall fails.
- Recent events
- Nov 12, 2026: Cisco reported Q1 fiscal 2027 results. Revenue grew 24% to a record $18.5 billion, and product revenue grew 32%. GAAP EPS was $1.14, and non-GAAP EPS grew 40% to a record $1.40. The non-GAAP gross margin was 65.6%, down from 68.1%. Cisco raised its fiscal 2027 guidance to $74.8 billion to $75.8 billion in revenue and $5.47 to $5.53 in non-GAAP EPS, and it now expects $9 billion of AI infrastructure revenue from hyperscalers in fiscal 2027. It guided Q2 fiscal 2027 revenue of $18.0 billion to $18.2 billion. It returned $3.7 billion to shareholders in the quarter and declared a quarterly dividend of $0.42 per share.
Nov 3, 2026: 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.
Aug 12, 2026: 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.
May 13, 2026: 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.
Feb 11, 2026: 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.