CSCO changes

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View the full Nov 13, 2026 version

Price: $93.85 → $100.76(+7.4%)
Discount category: Below intrinsic value → Close to intrinsic value
Next earnings: Nov 12, 2026 → Feb 12, 2027
Next earnings is estimate: No → Yes
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. removed: Product revenue grew 24% in Q4 added: In Q1 fiscal added: 2027, which ended on October 24, 2026, added: revenue was a record $18.5 billion, product revenue grew 32%, and Networking product revenue grew removed: 28%. added: 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. removed: Total product orders added: Revenue grew removed: 35% added: 24% to a record $18.5 billion in removed: Q4 added: Q1 fiscal removed: 2026, networking orders grew 40%, added: 2027, and added: Networking product revenue grew 43%. Cisco now expects $9 billion of AI infrastructure removed: orders added: revenue from hyperscalers removed: reached $9.3 billion in fiscal added: 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. removed: Higher memory costs and the mix of products lowered the added: The non-GAAP gross margin added: fell to removed: 66.3% added: 65.6% in removed: Q4 added: Q1 fiscal removed: 2026 added: 2027 from removed: 68.4% added: 68.1% a year removed: earlier. Inventory added: earlier, and inventory rose to removed: $5.7 added: $6.4 billion added: at October 24, 2026 from removed: $3.2 billion. added: $5.7 billion at July 25, 2026. The market treats the strong removed: orders added: demand as the peak of a cycle. For the gap to close, three things must be true. Cisco must reach its added: raised fiscal 2027 guidance of removed: $72.2 added: $74.8 billion to removed: $73.4 added: $75.8 billion in revenue and removed: $5.05 added: $5.47 to removed: $5.11 added: $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 removed: $7.5 added: $9 billion in fiscal 2027, while the campus refresh and security keep growing. The removed: Q1 added: Q2 fiscal 2027 removed: report on November 12, 2026 added: report, which Cisco has not dated yet, gives the next test. If removed: orders added: 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 removed: 64.8% added: 63.7% in removed: Q4 added: Q1 fiscal removed: 2026 added: 2027 from removed: 67.5%, and added: 67.2% a year earlier. In August 2026, Cisco added: 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 added: $6.4 billion at October 24, 2026, from $5.7 billion at July 25, 2026 removed: from $3.2 billion, and removed: purchase added: $3.2 billion a year before that. Purchase commitments for Cisco Silicon One and memory also removed: rose. added: rose in fiscal 2026. If demand falls, Cisco can have write-downs and losses on these commitments. Commercial paper removed: rose to added: was $6.7 billion added: 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: removed: $15.9B added: $15.8B Debt: removed: $29.7B added: $29.8B Net debt: removed: $13.8B added: $14.0B Interest cover: removed: 10× added: 15× Undrawn credit line: $5.0B, to February 2029 Debt due within 12 months: removed: $10.2B added: $10.4B Last debt due: 2064 Cisco funds itself with senior fixed-rate notes and commercial paper. At removed: July 25, added: October 24, 2026, removed: the principal added: cash and cash equivalents were $7.8 billion and investments were $8.1 billion, a total of removed: senior notes added: $15.8 billion. Short-term debt was added: $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 removed: billion, added: billion of senior notes with maturities removed: from 2026 to removed: 2064, added: 2064 and removed: commercial paper was $6.7 removed: billion, up from $3.5 billion removed: a year earlier. Short-term debt on the balance sheet was $10.2 billion. Cash, cash equivalents and investments were $15.9 billion. added: 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 removed: borrowings. added: borrowings at that date. Interest cover is GAAP operating income of removed: $15.4 added: $5.6 billion divided by interest expense of removed: $1.47 billion added: $368 million for added: Q1 fiscal removed: 2026. added: 2027. Operating cash flow was removed: $14.2 added: $4.4 billion in removed: fiscal 2026, flat from fiscal 2025, because inventories rose by $2.5 billion added: Q1, up 36%, and removed: financing receivables by $1.8 billion. Capital added: capital spending was removed: $1.4 billion. added: $502 million. Cisco paid removed: $6.6 added: $1.65 billion in dividends and bought back removed: $6.1 added: $2.0 billion of its shares in removed: fiscal 2026, added: the quarter, and removed: $8.1 added: $6.1 billion of buyback authorization is left. As of removed: Jul 25, added: Oct 24, 2026.
Checkpoints: Nov 12, 2026: Q1 fiscal 2027 results: margins and AI orders. added: 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 removed: $7.5 added: $9 billion or more in fiscal 2027 passes; a large shortfall fails.
Recent events: Nov added: 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.