Cisco Systems reported stronger-than-expected financial results for the first quarter of fiscal 2027, supported by rising demand for networking equipment used in artificial intelligence infrastructure. The company generated revenue of $18.5 billion, an increase of 24% year over year, while adjusted earnings per share reached $1.40. Both figures exceeded Wall Street expectations, highlighting the growing contribution of AI-related spending to Cisco’s business.
The networking equipment maker also raised its full-year outlook and increased its forecast for AI infrastructure revenue from hyperscale customers to $9 billion in fiscal 2027, up from its previous estimate of $7.5 billion. The latest results suggest that demand for AI infrastructure is expanding beyond processors and servers to include the networking systems required to connect increasingly large data centers.
Cisco Reports $18.5 Billion Revenue in Q1 FY2027
For the quarter ended October 24, 2026, Cisco reported revenue of $18.5 billion, compared with $14.9 billion in the corresponding period last year. The 24% increase represented the company’s strongest revenue growth in more than 15 years.
The company also exceeded analyst expectations. Market estimates had placed quarterly revenue at approximately $18.1 billion, while adjusted earnings per share were expected to reach around $1.33.
Cisco delivered adjusted earnings of $1.40 per share, comfortably beating that estimate. Its GAAP earnings per share reached $1.14, compared with $0.72 a year earlier.
Net income increased to approximately $4.6 billion from $2.9 billion in the year-ago quarter, representing growth of around 59%.
Cisco Q1 FY2027 Financial Highlights
| Metric | Q1 FY2027 | Year-over-year change |
|---|---|---|
| Revenue | $18.5 billion | +24% |
| GAAP net income | $4.6 billion | +59% |
| GAAP EPS | $1.14 | +58% |
| Non-GAAP EPS | $1.40 | +40% |
| Non-GAAP operating margin | 37.8% | Record level |
| Operating cash flow | $4.4 billion | +36% |
The results demonstrate that Cisco is benefiting from higher demand while also improving profitability. Its non-GAAP operating margin reached 37.8%, reflecting operating efficiency and stronger earnings growth.
Networking Business Leads Cisco’s Growth
Cisco’s networking division was the biggest contributor to quarterly performance. Revenue from the segment increased 43% year over year to $11.13 billion.
The division includes switching and routing products, data center networking equipment, optical networking systems and other technologies used to connect enterprise and cloud infrastructure.
Demand has increased as hyperscalers and other large technology companies expand their data center capacity to support AI workloads. These facilities require high-speed networking systems to move large volumes of information between processors, storage systems and servers.
Cisco said networking product orders increased 28% during the quarter, marking its ninth consecutive quarter of double-digit growth in orders.
The company also reported growth across several product categories, including service provider routing, enterprise routing, wireless, data center switching and campus switching.
Revenue by Business Segment
| Business segment | Q1 FY2027 revenue | Year-over-year growth |
|---|---|---|
| Networking | $11.13 billion | 43% |
| Security | $2.12 billion | 7% |
| Collaboration | $1.14 billion | 8% |
| Observability | $279 million | 2% |
| Services | $3.85 billion | 1% |
The figures show that networking is currently driving Cisco’s growth, while security and collaboration are also expanding. The company is positioning its broader portfolio of networking, cybersecurity and observability products to serve organizations building more complex AI environments.
Cisco Raises AI Infrastructure Revenue Forecast to $9 Billion
One of the most significant developments in the earnings announcement was Cisco’s increased forecast for AI infrastructure revenue from hyperscalers.
The company now expects this business to generate approximately $9 billion in fiscal 2027, compared with its previous estimate of $7.5 billion. The revised target is also more than double the $4 billion generated in fiscal 2026.
Hyperscalers are large cloud and technology companies that operate extensive data center networks. Their investment in AI infrastructure has increased demand for high-performance networking equipment alongside processors and other computing components.
Cisco’s switches and routers help connect thousands of processors and servers within data centers, allowing AI systems to transfer information efficiently.
The $9 billion forecast therefore reflects an important shift in the AI infrastructure market. Spending is no longer concentrated exclusively on graphics processing units and specialized AI chips. Networking equipment is becoming an increasingly important part of the investment cycle.
Cisco CEO Chuck Robbins described the opportunity as the early stage of a multi-year networking supercycle, arguing that companies will need more networking capacity as AI adoption expands.
Cisco Raises Its Full-Year Fiscal 2027 Guidance
Following its stronger-than-expected first-quarter performance, Cisco increased its financial outlook for the full fiscal year.
The company now expects fiscal 2027 revenue between $74.8 billion and $75.8 billion. Its previous forecast ranged from $72.2 billion to $73.4 billion.
Cisco also expects non-GAAP earnings per share between $5.47 and $5.53 for the year.
The revised outlook reflects management’s confidence in demand for networking equipment and the company’s ability to convert that demand into higher earnings.
Cisco’s Updated Financial Outlook
| Financial metric | Fiscal 2027 forecast |
|---|---|
| Revenue | $74.8 billion–$75.8 billion |
| Non-GAAP EPS | $5.47–$5.53 |
| AI infrastructure revenue from hyperscalers | Approximately $9 billion |
For the second quarter of fiscal 2027, Cisco expects revenue between $18 billion and $18.2 billion. It forecasts non-GAAP earnings per share of $1.34 to $1.36.
These projections provide investors with an indication of how the company expects its growth trajectory to continue beyond the latest quarter.
AI Infrastructure Spending Creates a New Opportunity for Cisco
The expansion of AI data centers is changing the competitive landscape for networking companies.
Training and operating advanced AI models require large clusters of processors that must communicate with one another at high speeds. As these clusters become larger, networking performance, bandwidth and reliability become increasingly important.
Cisco is attempting to capture this opportunity through its data center switching, routing, optical networking and security products.
The company is also expanding its software capabilities. Its security and observability businesses help organizations monitor infrastructure, protect systems and manage increasingly complex technology environments.
However, the opportunity comes with risks. Data center construction requires enormous capital investment, and higher borrowing costs could affect the pace of new projects. Rising memory and component costs are also putting pressure on hardware manufacturers.
Cisco’s adjusted gross margin was 65.6% in the quarter, down from 68.1% a year earlier, although it was broadly in line with analyst expectations. The decline highlights the cost pressures facing hardware suppliers even as demand increases.
The Bigger Picture
Cisco’s latest results illustrate how the AI investment cycle is expanding into the networking infrastructure that connects large computing systems. While much of the attention surrounding artificial intelligence has focused on chipmakers, data center operators and cloud providers, networking companies are becoming important beneficiaries of the same spending trend.
The increase in Cisco’s AI infrastructure revenue forecast to $9 billion is particularly significant because it provides a clearer measure of the company’s exposure to hyperscaler investment. Its 43% networking revenue growth also suggests that demand is translating into sales rather than remaining limited to industry forecasts and project announcements.
Looking Ahead
Cisco’s performance in the coming quarters will depend partly on whether hyperscalers continue expanding their AI data center capacity and whether the company can maintain its strong networking growth. Its raised fiscal 2027 guidance indicates that management expects demand to remain healthy, although component costs, financing conditions and the timing of infrastructure projects could influence results.
For the broader technology industry, Cisco’s earnings provide another indication that the AI infrastructure opportunity extends well beyond processors. As companies build larger AI systems, demand for networking equipment, cybersecurity and infrastructure management is likely to remain an important part of the investment cycle.
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