Cisco Systems (NASDAQ: CSCO) has reported its Q4 FY2026 results for the quarter ended July 25, 2026, and the numbers were exceptionally strong. Revenue reached a record $17.25 billion, while GAAP net income jumped 51% year over year.
The biggest story is AI infrastructure. Cisco is benefiting from the rapid expansion of AI data centers because AI workloads require much faster networking, security and data-center infrastructure. Cisco’s networking product orders increased 40% YoY, while AI infrastructure orders from hyperscalers reached $4 billion in Q4 and $9.3 billion for FY2026.
Latest Quarterly Result — Q4 FY2026
| Metric | Q4 FY2026 | Q4 FY2025 | YoY Change |
| Revenue | $17.25B | $14.67B | +18% |
| GAAP Net Income | $3.86B | $2.55B | +51% |
| GAAP EPS | $0.97 | $0.64 | +52% |
| Non-GAAP Net Income | $4.9B | $4.0B | +23% |
| Non-GAAP EPS | $1.22 | $0.99 | +23% |
| GAAP Operating Margin | 24.7% | — | — |
| Non-GAAP Operating Margin | 35.9% | — | — |
| Operating Cash Flow | $5.4B | $4.2B | +27% |
| AI Infrastructure Orders | $4.0B | — | — |
| Total FY26 AI Infrastructure Orders | $9.3B | — | — |
Cisco’s official results show that Q4 revenue, operating income and EPS all exceeded the company’s guidance range.
Revenue Growth Was Very Strong
Cisco generated $17.25 billion in Q4 revenue, compared with $14.67 billion a year earlier.
That represents approximately 18% YoY growth.
More importantly, growth was not limited to one geography:
- Americas: +18%
- EMEA: +19%
- APJC: +14%
So Cisco’s growth was relatively broad-based rather than being dependent on a single region.
Product revenue was the major driver
Product revenue increased 24%, while services revenue was essentially flat.
This is important because the current growth cycle is being driven heavily by demand for networking hardware and AI infrastructure.
Networking Is the Biggest Growth Engine
Cisco’s networking business was the strongest part of the quarter.
| Product Area | Q4 Revenue | YoY Growth |
| Networking | $9.79B | +28% |
| Security | $2.23B | +14% |
| Collaboration | $1.17B | +12% |
| Observability | $275M | +6% |
| Services | $3.79B | Flat |
Networking alone generated almost $9.8 billion in quarterly revenue.
Even more impressive, Cisco said networking product orders grew 40% YoY, marking the eighth consecutive quarter of double-digit growth.
Why is networking growing so quickly?
AI data centers require enormous amounts of data to move between:
- GPUs
- servers
- storage
- AI clusters
- cloud infrastructure
Therefore, AI investment is creating a secondary demand cycle for networking infrastructure.
This is why Cisco is increasingly being viewed not simply as a traditional networking company, but as an AI infrastructure beneficiary.
AI Infrastructure Is Becoming a Major Business
This is probably the most important part of Cisco’s latest result.
Cisco received $4 billion of AI infrastructure orders during Q4 FY2026.
For the entire fiscal year, AI infrastructure orders reached $9.3 billion.
Cisco also delivered approximately $4 billion of AI infrastructure revenue during FY2026 and expects approximately $7.5 billion of AI infrastructure revenue in FY2027.
This shows that AI is moving from being a future opportunity for Cisco into a meaningful current revenue driver.
Hyperscalers are important
Large cloud and technology companies are spending heavily on AI data centers. Cisco is supplying networking infrastructure to these customers.
The company said Q4 total product orders increased 35%, or 25% excluding hyperscalers. That distinction is important because it shows that demand is strong even beyond the biggest AI customers.
Profitability Improved Significantly
Cisco’s profitability also improved.
GAAP operating income reached $4.26 billion, up from approximately $3.09 billion in the previous-year quarter.
GAAP operating margin was 24.7%, while non-GAAP operating margin reached 35.9%.
GAAP net income increased from:
$2.55B → $3.86B
That’s a 51% increase.
GAAP EPS increased from:
$0.64 → $0.97
That’s a 52% increase.
This is particularly strong because earnings growth was significantly faster than revenue growth.
But There Is a Margin Concern
There is one important weakness investors should watch.
Cisco’s GAAP gross margin was 64.1%, compared with 63.2% a year earlier.
However, its non-GAAP gross margin declined to 66.3% from 68.4%.
Why?
The increasing contribution from AI infrastructure hardware can create a different product mix, and AI networking hardware can carry lower margins than some higher-margin software and services businesses.
So Cisco is experiencing:
Higher revenue + higher AI demand + stronger profits
but also:
Potential pressure on gross margins.
This was one reason investors reacted cautiously to the earnings announcement despite the strong headline numbers. Reuters reported that Cisco shares initially rose after the results but later fell as investors focused on margin expectations.
Cash Flow Remains Strong
Cisco generated $5.4 billion in operating cash flow in Q4, up 27% YoY from $4.2 billion.
For FY2026, operating cash flow was approximately $14.2 billion, broadly flat compared with FY2025.
This means the company continues to generate substantial cash even while investing heavily in AI infrastructure and technology.
That cash supports:
- Dividends
- Share buybacks
- Acquisitions
- R&D
- Strategic investments
Cisco Returned $3.2 Billion to Shareholders
Cisco continues to emphasize shareholder returns.
During Q4 FY2026, the company returned approximately $3.2 billion through dividends and share repurchases.
It:
- Paid $1.7B in dividends
- Repurchased approximately 13 million shares
- Spent around $1.5B on buybacks
Cisco also declared a quarterly dividend of $0.42 per share.
The company still had approximately $8.1 billion remaining under its share repurchase authorization.
Balance Sheet
At the end of Q4 FY2026, Cisco had approximately:
$15.9 billion in cash, cash equivalents and investments.
This was down from $16.6 billion at the end of Q3 but remains a substantial liquidity position.
Cisco also reported $46.7 billion in remaining performance obligations (RPO), up 7% YoY.
RPO provides visibility into future contracted revenue.
FY2027 Guidance Is Very Strong
Cisco’s outlook is perhaps even more important than the Q4 numbers.
Q1 FY2027
| Metric | Guidance |
| Revenue | $18.0B–$18.2B |
| Non-GAAP EPS | $1.32–$1.34 |
| GAAP EPS | $1.08–$1.10 |
| Non-GAAP Gross Margin | 65%–66% |
| Non-GAAP Operating Margin | 35.5%–36.5% |
Full FY2027
| Metric | Guidance |
| Revenue | $72.2B–$73.4B |
| Non-GAAP EPS | $5.05–$5.11 |
| GAAP EPS | $4.00–$4.06 |
The FY2027 revenue guidance is substantially above the approximately $68.7 billion Wall Street expectation reported around the earnings announcement.
That’s a strong signal that Cisco’s management expects the AI networking cycle to continue.
Acquisitions Support Cisco’s AI Strategy
Cisco also completed two acquisitions during Q4:
- Galileo Technologies — observability
- Astrix Security — non-human identity security
These acquisitions fit into Cisco’s broader strategy of combining networking + security + observability + AI infrastructure.
This is important because AI infrastructure isn’t only about faster networking. As AI agents and autonomous systems become more widespread, companies also need stronger security and monitoring.
What Is the Biggest Positive?
The biggest positive from this result is that AI demand is translating into actual orders and revenue.
Cisco’s numbers tell a clear story:
AI spending → AI data centers → networking demand → Cisco orders → revenue growth → higher earnings
The $9.3 billion FY2026 AI infrastructure order figure is particularly significant.
Cisco is therefore positioned to benefit from the AI infrastructure investment cycle without needing to compete directly with GPU manufacturers.
What Are the Main Risks?
Despite the excellent result, investors should watch several risks.
1. Margin pressure
AI hardware growth could reduce the company’s overall gross margin.
2. High expectations
Cisco’s stock had already performed strongly because investors were expecting substantial AI growth. Therefore, even a good result can produce a negative stock reaction if expectations are even higher.
3. Hyperscaler concentration
Large cloud companies are becoming increasingly important customers for AI infrastructure.
4. AI spending cycle
If hyperscalers slow their AI capital expenditure, Cisco’s AI infrastructure growth could also slow.
5. Hardware vs. software mix
Cisco wants to increase recurring software and services revenue, but the current AI boom is generating significant hardware demand. Maintaining profitability while scaling hardware will be important.
Outcome
Cisco’s Q4 FY2026 result was fundamentally very strong.
The company delivered:
- 18% revenue growth
- 51% GAAP net-income growth
- 52% GAAP EPS growth
- 28% networking revenue growth
- 40% networking order growth
- $9.3B FY2026 AI infrastructure orders
- $5.4B quarterly operating cash flow
- Strong FY2027 revenue guidance of $72.2B–$73.4B
The key investment story has changed from “Cisco is a mature networking company” to “Cisco is becoming a major beneficiary of the AI infrastructure spending cycle.”
However, the key question going forward is whether Cisco can convert its huge AI order pipeline into revenue without sacrificing too much margin.
Overall assessment: Strong result, strong AI momentum, strong FY2027 outlook — but margin pressure and high investor expectations remain the main things to watch.
Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. Please do your own research before making any investment decision.
Sources: Cisco Investor Relations – Q4 & FY2026 Results; Cisco Quarterly Results.
