Cisco Raises Full-Year Revenue Expectations

Cisco increased its fiscal 2027 revenue forecast after reporting first-quarter results above market expectations, supported by continued demand for networking equipment used in artificial intelligence infrastructure.

The company now expects annual revenue between $74.8 billion and $75.8 billion, compared with its previous projection of $72.2 billion to $73.4 billion.

Chief Executive Chuck Robbins described the networking industry as being in the early stages of a multi-year growth cycle, as companies expand the infrastructure needed to support increasingly large AI data centers.

Cisco’s strategy reflects a broader shift in technology investment. Spending is extending beyond AI processors to the switches, routers and other networking equipment required to connect large computing systems.

Hyperscaler AI Infrastructure Revenue Forecast Increased

Cisco raised its fiscal 2027 forecast for AI infrastructure revenue from hyperscale customers to $9 billion, compared with its previous estimate of $7.5 billion. The business generated $4 billion in revenue a year earlier.

The increase reflects expectations that major cloud and technology companies will continue investing in the networking capacity required for AI development and deployment.

Cisco is also expanding its software capabilities, including tools designed to help businesses build and manage AI agents that can protect IT infrastructure against cybersecurity threats.

First-Quarter Results Exceed Market Expectations

For the quarter ended October 24, Cisco reported revenue of $18.5 billion, exceeding the analyst consensus estimate of $18.14 billion.

Adjusted earnings reached $1.40 per share, above the expected $1.33.

Adjusted gross margin was 65.6%, in line with estimates but below the 68.1% recorded in the same quarter a year earlier.

Gross margins have been under pressure as memory chip shortages increase component costs for hardware manufacturers. Suppliers have also been prioritizing chips for AI data-center customers, contributing to higher input costs.

Cisco’s results indicate that stronger demand is supporting revenue growth despite these cost pressures.

Investors Monitor Margins and AI Spending Risks

Investors have been assessing whether data-center construction could slow amid higher borrowing costs and concerns about debt-funded infrastructure investment. Political developments following the US midterm elections have also contributed to uncertainty around the outlook for technology spending.

Cisco shares were little changed in volatile extended trading after the results. The stock had gained approximately 32% through Thursday’s close.

The company’s higher forecast and quarterly earnings performance provided evidence of continued demand for AI networking equipment, although margin trends remain an important consideration.

What Investors Should Watch Next

Investors will be monitoring whether hyperscaler spending continues to support Cisco’s higher AI infrastructure revenue target and whether the company can manage component costs without further significant pressure on gross margins.

The updated annual outlook places greater emphasis on networking equipment as a major part of the AI infrastructure investment cycle. Future results will help establish whether the current demand environment can sustain the company’s projected growth.