Cisco Surges on Strong AI Demand and Bullish Outlook

Cisco (CSCO) has delivered a strong upside quarter that exceeded expectations, signalling that its strategic change to capture the AI infrastructure build-out is gaining traction. The company reported  $14.9 billion in Q1 2026 revenue and $1 per share adjusted earnings, both beating estimates. This marks the fourth consecutive quarter of growth after a period of declines, driven by a powerful 15% surge in its core networking segment. These results, and an optimistic forecast, sent the stock up more than 4%.

Key Financial Metrics

●      Total revenue: $14.9 billion, an 8% increase year-over-year (YoY). This shows that its entire business is expanding at a solid 8% pace. It proves that Cisco is successfully growing its sales across its portfolio of products and services. This steady growth is a positive sign of overall business health and market demand.

●      Networking revenue: $7.77 billion, a 15% increase YoY. Networking, which includes selling switches and routers, is Cisco’s core business. The 15% growth is a potential signal that demand for its main products is not just stable but accelerating. This is likely driven by the massive AI data centre build-out, where customers need faster, more powerful networking gear, directly benefiting Cisco’s primary strength.

●      Earnings per share (EPS): $1, a 10% increase YoY. The fact that EPS grew by 10%, faster than the 8% revenue growth, is a key indicator of operating leverage. It means the company is becoming more efficient, and each dollar of new revenue is generating more profit than before. This demonstrates cost control and margin management, which investors value highly.

●      AI infrastructure orders: Highlighted $1.3 billion in orders from hyperscaler customers. This is a new and crucial forward-looking metric. It provides concrete proof that Cisco’s strategy to become a key player in the AI revolution is working. Securing $1.3 billion in orders specifically for AI from the biggest cloud companies validates its technology and gives investors a tangible number to track the success of its AI change. This is a direct signal of future revenue growth in the most important tech market today.

●      Quarterly dividend: Declared a quarterly dividend of $0.41 per share. For a mature and highly profitable company like Cisco, a consistent and predictable dividend is a sign of financial stability and management’s confidence in its ability to generate steady cash flow. It shows the business is strong enough to both invest in future growth and reward its shareholders at the same time.

Analysis & Outlook

Cisco’s Q1 points to a potential reset in how the market views its role in the AI era. A standout 15% surge in its networking division suggests that global investment in AI data centres is beginning to reshape hardware demand in Cisco’s favour. Management’s efforts to align the business with the accelerating AI cycle are becoming increasingly clear through the $1.3 billion in hyperscaler AI-infrastructure orders and the launch of a new Nvidia-powered Ethernet switch designed to capture even more of this growth. Although the security and collaboration segments posted small declines of 2% and 3% respectively, AI-driven momentum and the early stages of a multi-year campus-network refresh helped reinforce the company’s overall performance. Guidance for both Q2 and the full fiscal year came in ahead of expectations, adding further confidence to Cisco’s operational trajectory at a time when the stock price has already increased by more than 30% this year and outpaced the Nasdaq 100. For market followers assessing the evolution of major AI-infrastructure leaders, Cisco’s growing participation in the long-duration AI investment cycle offers a developing narrative worth exploring further.

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** This article was prepared by BROKSTOCK analyst Maboko Seabi