Cisco beats earnings as AI orders surge: can CSCO extend its massive 2026 rally?

Cisco Systems CSCO shares fell in extended trading despite the tech conglomerate reporting stronger-than-expected Q4 earnings, supported by robust artificial intelligence (AI)-driven demand.

The company’s revenue came in up 18% year over year at $17.3 billion, with per-share earnings (EPS) of $1.22, both comfortably ahead of Street estimates.

At the time of writing, Cisco stock is up more than 50% versus the start of this year (2026).

What drove strength in Cisco’s fiscal Q4?

Cisco attributed its Q4 strength to a resurgence in hardware demand – with total product revenue coming in up 24% versus the same quarter last year, and the networking business gaining 28%.

The primary engine behind this expansion was AI demand, with the giant capturing $4 billion in Q4 orders alone, pushing its full-year tally to $9.3 billion – significantly outpacing management’s expectations.

Industry analysts note that CSCO’s enterprise clients are transitioning from exploratory AI pilots to large-scale data center deployments.

Total product orders surged 35% in the quarter, confirming that Cisco Systems’ pivot toward high-bandwidth, AI-optimized switching architectures is capturing share from legacy competitors while validating sustained corporate IT spending.

CSCO issued upbeat full-year guidance

Reinforcing investor confidence, Cisco issued ambitious guidance for fiscal 2027.

Management projects full-year revenue between $72.2 billion and $73.4 billion – easily outpacing analyst consensus targets that had modeled sub-10% growth.

Non-GAAP earnings are now seen falling between $5.05 and $5.11, also ahead of the consensus set at $4.8, indicating the firm’s AI customer buildouts are translating into multi-quarter backlogs rather than one-off purchasing spikes.

By guiding for accelerated revenue growth, leadership signalled strong pricing power, stabilizing enterprise budgets, and seamless integration of software recurring revenue that smooth out cyclical hardware trends.

What else makes Cisco stock worth buying

Beyond immediate order momentum, Cisco’s underlying financial health provides a strong buffer for continued capital return and innovation.

Quarterly operating cash flow jumped 27% year-on-year to $5.4 billion, allowing the company to return $3.2 billion to shareholders through $1.7 billion in dividends and $1.5 billion in buybacks.

Simultaneously, recent strategic additions – including the completions of Galileo Technologies and Astrix Securities – expand Cisco's footprint in network security and automated observability.

By coupling high-speed Ethernet hardware with security and analytics software, Cisco Systems is positioning itself as an indispensable end-to-end partner for cloud providers and Fortune 500 enterprises navigating the AI transformation.

How Wall Street recommends playing CSCO shares

Despite the explosive year-to-date rally in CSCO stock, Wall Street analysts remain bullish as ever on the legacy tech company for the remainder of 2026.

According to The Wall Street Journal, the consensus rating on Cisco Systems sits at Overweight, with price targets going as high as $170, indicating potential upside of more than 35% from here.