Cisco Earnings Beat as AI Networking Sales Jump 43%
Cisco's revenue rose 24% to $18.5B and it now expects $9B in AI sales from cloud giants this fiscal year. What the beat says about the AI networking boom.
Hakkı ALKANPublished 4 min read
Cisco earnings beat Wall Street expectations in the first quarter of fiscal 2027, according to the company's first quarter earnings release published in San Jose on Nov. 12, 2026. For the quarter ended Oct. 24, 2026, revenue rose 24% year over year to $18.5 billion, networking sales grew 43%, and Cisco raised its FY27 AI infrastructure revenue expectation from hyperscalers to $9 billion.
CNBC reported, using LSEG consensus data, that Cisco topped estimates of $18.1 billion in revenue and $1.33 in adjusted EPS. Cisco reported non-GAAP EPS of $1.40. Non-GAAP means adjusted results that exclude certain accounting items. Investing.com said shares rose about 4% after the report.
Why did Cisco earnings beat expectations?
Cisco's product revenue increased 32% year over year, while services revenue rose 1%. By segment, Networking grew 43%, Security grew 7%, Collaboration grew 8%, and Observability grew 2%.
Growth was broad across regions. Revenue rose 28% in the Americas, 18% in EMEA, and 21% in APJC. Cisco also reported GAAP net income of $4.6 billion, up 59%, and non-GAAP net income of $5.6 billion, up 39%.
What do the key numbers show?
| Metric | Q1 FY27 or guidance | Q1 FY26 or estimate | Result |
|---|---|---|---|
| Revenue | $18.5 billion | $14.9 billion | Up 24% year over year |
| Non-GAAP EPS | $1.40 | $1.00 | Up 40% year over year |
| GAAP EPS | $1.14 | $0.72 | Up 58% year over year |
| Q1 revenue result | $18.5 billion | $18.1 billion LSEG estimate | Beat estimate |
| Q1 adjusted EPS result | $1.40 | $1.33 LSEG estimate | Beat estimate |
| Q2 revenue guidance | $18.0 billion to $18.2 billion | $17.88 billion LSEG estimate | Above estimate |
| Q2 non-GAAP EPS guidance | $1.34 to $1.36 | $1.23 LSEG estimate | Above estimate |
Why does AI infrastructure matter for Cisco?
AI data centers need switches, routers, and optics to connect GPU clusters built on chips from vendors such as Nvidia. Hyperscalers, meaning the largest cloud operators such as Microsoft, Google, Amazon, and Meta, are the customer group behind Cisco's $9 billion FY27 AI infrastructure revenue expectation, which is more than double its FY26 total.
"We are in the very early stages of a multi-year networking supercycle, and we're confident in our ability to continue capturing the multi-billion-dollar opportunity it represents for Cisco," chair and CEO Chuck Robbins said.
Cisco missed the early years of the generative AI boom and is now trying to gain a stronger foothold in the AI buildout. CNBC reported that Cisco shares were up about 35% this year as of Thursday's close, compared with about 9% for the Nasdaq.
What happened to margins?
Revenue accelerated, but gross margins narrowed. Non-GAAP gross margin fell to 65.6% from 68.1% a year earlier. Product gross margin declined to 63.7% from 67.2%.
Operating leverage still lifted profit growth, something CFO Mark Patterson said is "enabling us to grow earnings much faster than revenue." GAAP EPS rose 58% to $1.14, while non-GAAP EPS rose 40% to $1.40. Cisco called the quarter its strongest revenue and non-GAAP EPS growth in more than 15 years, with record revenue, record GAAP EPS, record non-GAAP EPS, and record non-GAAP operating margin.
What is Cisco guiding for next?
For the second quarter of fiscal 2027, Cisco guided for revenue of $18.0 billion to $18.2 billion, non-GAAP EPS of $1.34 to $1.36, GAAP EPS of $1.07 to $1.09, and non-GAAP gross margin of 65% to 66%.
CNBC's LSEG data showed that the Q2 revenue outlook was above the $17.88 billion estimate, while the Q2 adjusted EPS outlook was above the $1.23 estimate. Cisco also raised its full-year FY27 guidance to revenue of $74.8 billion to $75.8 billion and non-GAAP EPS of $5.47 to $5.53. Cisco returned $3.7 billion to shareholders in the quarter through $2.0 billion of buybacks and $1.7 billion of dividends, and declared a $0.42 quarterly dividend payable Jan. 20, 2027.
Our take: What should investors watch next?
The Cisco earnings report suggests networking is becoming a more direct AI infrastructure story, especially as cloud companies expand GPU clusters. The key question is whether AI-driven demand can keep lifting revenue faster than margin pressure offsets the benefit.
The same week, Cerebras beat estimates while Nebius shares slid on rising capex, making this an AI infrastructure season rather than a one-company story. Cisco's $9 billion AI infrastructure outlook is a meaningful demand signal for the broader data center supply chain.