Cisco Systems (CSCO) Stock Falls After Hours Despite Strong Q4 Earnings Beat

TLDR

• Cisco reported Q4 adjusted EPS of $1.22 on revenue of $17.3 billion, beating estimates of $1.17 EPS and $16.8 billion revenue
• Networking revenue rose 28% year over year to $9.79 billion, ahead of the $9.66 billion expected
• Full-year fiscal 2026 AI infrastructure orders hit $9.3 billion, topping the company’s own $9 billion target
• Fiscal 2027 guidance of $72.2-$73.4 billion in revenue and EPS of $5.05-$5.11 both cleared analyst expectations
• CSCO stock fell around 4% after hours despite the beat, with gross margins dipping to 66.3% from 68.4% a year ago

Cisco Systems reported fiscal fourth-quarter results that beat Wall Street expectations on both the top and bottom line, but the stock still dropped in after-hours trading.

Cisco Systems, Inc., CSCO

Adjusted earnings came in at $1.22 per share on revenue of $17.3 billion. Analysts had been expecting $1.17 per share on $16.8 billion in revenue.

Revenue was up 18% year over year. Total product revenue jumped 24% compared to the same quarter last year.

CISCO $CSCO Q4’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $17.3B (Est. $16.82B) 🟢; +18% YoY
🔹 Non-GAAP EPS: $1.22 (Est. $1.17) 🟢; +23% YoY
🔹 Adj. Oper Margin: 35.9%
🔹 Adj. Oper Income: $6.2B (Est. $5.85B) 🟢

Raises FY27 Guide:
🔹 Revenue: $72.2B-$73.4B (Est. $68.69B) 🟢
🔹 Adj.… pic.twitter.com/xyjcsQHQNB

— Wall St Engine (@wallstengine) August 12, 2026

The networking segment was a key driver, bringing in $9.79 billion. That was a 28% increase from a year ago and came in ahead of the $9.66 billion analysts had penciled in.

Cisco captured $4 billion in AI infrastructure orders in Q4 alone. That pushed its full-year fiscal 2026 AI order total to $9.3 billion, clearing the company’s own raised target of $9 billion.

For context, Cisco had entered the year with a $5 billion AI order target. It raised that to $9 billion in May, and still beat it.

Total product orders surged 35% in the quarter.

Guidance Comes in Well Above Expectations

For fiscal 2027, Cisco guided for revenue between $72.2 billion and $73.4 billion. Analysts had been modeling around $69.1 billion.

Non-GAAP EPS guidance of $5.05 to $5.11 also topped the consensus estimate of $4.83.

Operating cash flow rose 27% year over year to $5.4 billion. The company returned $3.2 billion to investors through $1.7 billion in dividends and $1.5 billion in buybacks.

Why the Stock Dropped

Despite the strong numbers across the board, CSCO fell about 4% in extended trading after an initial pop.

Gross margins may be the culprit. Total gross margin came in at 66.3%, down from 68.4% in the same quarter last year. Rising costs for AI hardware components like memory could be a factor.

CSCO had also gained over 61% year to date heading into the report, setting a high bar.

CEO Chuck Robbins said: “With the breadth and depth of our portfolio and our competitive differentiation in secure networking, Cisco is well positioned to support our customers however or wherever they decide to deploy AI.”

Cisco also completed acquisitions of Galileo Technologies and Astrix Securities during the period, expanding its reach in network security and automated observability.

CSCO stock is up more than 50% year to date as of the time of reporting.

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