Cisco Stock Eyes $9B AI Revenue as Quarterly Sales Jump 24% to Record $18.5B

Key takeaways

• Cisco posts record $18.5 billion revenue, up 24%
• AI infrastructure revenue forecast climbs to $9 billion
• Networking growth accelerates as profitability faces new pressures

Cisco Systems (NASDAQ: CSCO) delivered record quarterly revenue of $18.5 billion, a 24% increase from a year earlier, while raising its fiscal 2027 AI infrastructure revenue forecast to $9 billion as demand for artificial intelligence networking equipment accelerates.

According to Cisco's official earnings release, adjusted earnings reached $1.40 per share, up 40% year over year. The results exceeded the approximately $18.1 billion revenue expectation highlighted in the company's earlier earnings preview.

The stronger outlook marks another step in Cisco's transformation from a traditional enterprise networking supplier into a major beneficiary of hyperscaler AI spending, where companies including Broadcom are competing for expanding infrastructure budgets.

Cisco Raises AI Revenue Target to $9 Billion

Cisco now expects $9 billion in AI infrastructure revenue from hyperscale cloud customers during fiscal 2027, up from its previous $7.5 billion forecast and more than double the roughly $4 billion generated during fiscal 2026.

That represents a $1.5 billion increase in expected annual AI revenue, suggesting demand for high-performance networking remains stronger than management previously anticipated.

The company had already secured $9.3 billion in AI infrastructure orders during fiscal 2026, following an earlier AI orders surge that helped establish networking as one of its fastest-growing opportunities.

CEO Chuck Robbins described the current expansion as the early stages of a multiyear networking supercycle, reflecting the increasingly complex infrastructure required to connect thousands of AI accelerators.

Unlike AI cloud providers that must finance enormous computing facilities, Cisco primarily captures demand by supplying the networking technology connecting those systems.

Record Networking Growth Drives Cisco Earnings

Cisco's networking business generated $11.13 billion in quarterly revenue, increasing 43% year over year and accounting for approximately 60% of total company sales.

Product revenue climbed 32% to $14.67 billion, while services revenue increased just 1% to $3.85 billion. Security revenue grew 7%, collaboration increased 8%, and observability advanced 2%.

Cisco also raised its full-year revenue guidance to $74.8 billion-$75.8 billion, alongside adjusted earnings expectations of $5.47–$5.53 per share.

The stronger results contrast with mounting concerns over AI infrastructure debt, as cloud operators and data-center developers face increasingly expensive expansion programs.

What Does the $9B AI Forecast Mean for Cisco Stock?

Despite accelerating sales, Cisco faces a profitability challenge. Its adjusted gross margin declined to 65.6% from 68.1% a year earlier, indicating that rapid hardware growth does not automatically translate into stronger margins.

That distinction matters as investors reassess whether the wider AI spending boom can generate sustainable returns across the technology supply chain.

Cisco's forecast also depends on hyperscalers maintaining investment in AI networking. Slower cloud infrastructure spending, component costs or competition could affect future revenue and profitability.