Cisco Systems (CSCO) reported its fourth-quarter fiscal 2026 earnings on August 12, resulting in a 10% decline in share value due to concerns over margin pressure and growth quality. The company posted revenue of $17.3 billion, an 18% increase year-over-year, while product orders surged by 35%. Non-GAAP earnings per share rose 23% to $1.22, but non-GAAP gross margin fell by 210 basis points to 66.3%, reflecting the impact of rising hardware costs.
Looking ahead, Cisco forecasts a first-quarter fiscal 2027 gross margin between 65% and 66%. While hyperscaler AI infrastructure orders reached $9.3 billion in fiscal 2026—up 4.5 times from fiscal 2025—the company expects growth to be hampered by ongoing margin pressures from hardware sales. Annual Recurring Revenues (ARR) grew only 3%, indicating a need for stronger recurring revenue performance.
For fiscal 2027, the consensus estimate for earnings is $4.89 per share, suggesting a year-over-year growth of approximately 12.93%. Cisco analytics indicate that the company’s current premium valuation could limit safety margins amid its mixed forecast for revenue growth and gross margins.
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