What Happened?
Shares of networking technology giant Cisco (NASDAQ: CSCO) fell 9% in the afternoon session after the company reported fourth-quarter fiscal 2026 results that beat Wall Street's expectations for both revenue and profit. Cisco posted record revenue of $17.3 billion, growing 18% year over year and surpassing analyst estimates.
Non-GAAP earnings per share came in at $1.22, also beating consensus forecasts. Furthermore, Cisco provided an optimistic outlook, guiding fiscal 2027 revenue to $72.2–$73.4 billion, a 15% increase at the midpoint. The negative stock reaction to the positive news suggests that investor expectations were already very high. With the stock trading at a premium valuation ahead of the report and management declaring the start of an AI-driven "networking super cycle," the strong results and guidance may have already been priced in, prompting some investors to take profits.
The shares closed the day at $113.25, down 8.9% from the previous close.
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What Is The Market Telling Us
Cisco’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 14.6% on the news that it reported first-quarter results that topped Wall Street's expectations and provided surprisingly strong guidance for the upcoming quarter. Cisco raised its fiscal 2026 AI infrastructure order outlook from $5 billion to $9 billion, 4.5 times what it booked in all of fiscal 2025, after hyperscaler AI orders alone reached $1.9 billion in a single quarter, more than triple the $600 million from the same period last year. CEO Chuck Robbins confirmed five new hyperscaler design wins in the quarter, including the first deployments of Cisco's proprietary Silicon One P200 chip in scale-across data centre configurations.
For years, Cisco was seen primarily as a mature enterprise-networking company with limited AI exposure. The $9 billion AI order figure reframes that entirely: Cisco's custom silicon and Acacia optics business, are now a direct pick-and-shovel play on the same hyperscaler buildout driving NVIDIA's results. This combination of a solid quarterly performance and a robust forecast reassured investors about the company's growth trajectory.
Cisco is up 48.8% since the beginning of the year, but at $113.13 per share, it is still trading 13% below its 52-week high of $130 from June 2026. Investors who bought $1,000 worth of Cisco’s shares 5 years ago would now be looking at an investment worth $2,003.
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