Cisco Systems reported fourth-quarter results and guidance that beat analysts' expectations, yet its shares fell more than 4 percent in after-hours trading following the announcement.
Quarterly results
- Revenue rose 18 percent year-over-year, from $14.7 billion to $17.25 billion, topping the $16.82 billion analyst consensus.
- Net income increased 51 percent, from $2.6 billion to $3.9 billion.
- Adjusted earnings per share were $1.22, versus the $1.17 expected by analysts.
Guidance and fiscal outlook
For the next quarter Cisco forecast revenue of $18.0–18.2 billion, well above the market consensus of $16.8 billion. The company’s profit guidance also exceeded expectations, and management provided a strong outlook for the full fiscal year.
Hyperscalers and the AI-related demand
Hyperscale cloud and internet companies ordered $4 billion of infrastructure from Cisco during the quarter, bringing the total orders for the fiscal year to $9.3 billion. Hyperscaler-related revenue contributed about $4 billion in the prior fiscal year; management expects that amount to grow to $7.5 billion in fiscal 2027, nearly doubling.
Why the stock fell
Despite the beats, Cisco’s shares declined by over 4 percent after the report. Part of the reaction likely reflects the fact that the stock has already rallied more than 60 percent year-to-date, suggesting that much of the expected AI-driven growth had been priced in. The pullback indicates investors may have had even higher expectations than the company delivered.
Summary
Cisco produced solid top- and bottom-line growth and raised near-term guidance, supported by meaningful orders from hyperscalers tied to AI and cloud infrastructure. Nevertheless, the stock’s sharp year-to-date rise and elevated investor expectations appear to have contributed to the after-hours sell-off.
This article is not investment advice or a recommendation.
