Cisco Raises AI Revenue Target to $9 Billion in 2027
Key Facts
Cisco raised its target for AI infrastructure revenue from hyperscalers to $9 billion in fiscal 2027, saying the figure is more than double what it generated in fiscal 2026. The announcement came with results for the first quarter of fiscal 2027, which ended on October 24, 2026, when revenue reached $18.5 billion, up 24% year over year. The company reported GAAP net income of $4.6 billion, up 59%, while diluted earnings per share rose 58% to $1.14. On a non-GAAP basis, net income was $5.6 billion and earnings per share were $1.40, increases of 39% and 40%, respectively. The higher AI revenue target puts demand from major data center operators at the center of Cisco's outlook for next year.
Networking product revenue grew 43% year over year in the quarter, the fastest increase among the categories reported by the company, while security revenue rose 7%. Collaboration revenue increased 8% and observability revenue rose 2%. The divergence highlights networking's weight in Cisco's growth as the company moves to meet infrastructure needs for running AI applications. AI infrastructure revenue from hyperscalers was $4 billion in fiscal 2026, equivalent to 6% of Cisco's total revenue. On that basis, the new target would make AI a much larger component of the revenue base in fiscal 2027.
Alongside its higher AI target, Cisco raised its fiscal 2027 revenue guidance to a range of $74.8 billion to $75.8 billion, compared with its previous range of $72.2 billion to $73.4 billion. It also raised its non-GAAP earnings-per-share range to $5.47–$5.53, from $5.05–$5.11. The revisions show an improved outlook for both revenue and earnings after a quarter in which the company posted strong sales and income growth. But demand indicators did not all move at the same pace: total product orders rose 21% year over year in the first quarter of fiscal 2027, after increasing 35% in the fourth quarter of fiscal 2026. The comparison sets slower order growth against the higher annual outlook the company announced.
In contrast, non-GAAP gross margin fell to 65.6%, from 68.1% in the first quarter of fiscal 2026. Coverage attributed the decline to higher memory component costs and a larger contribution from lower-margin AI networking products to revenue. That means expanding networking sales may support growth, but comes with pressure on gross profit margins in the current results. Chief Executive Chuck Robbins said the company was "in the very early stages of a multiyear networking supercycle." The description places current demand within a cycle Robbins expects to extend over several years, while the order and margin figures reflect ongoing challenges in translating that momentum into balanced growth.
Despite the results and higher guidance, Cisco shares closed at $95.64 on November 13, 2026, down 6.24% during the session. The stock traded between $95.26 and $100.75. The session's price action shows the shares declined on the day the price was recorded, as the company widened its annual outlook and announced its AI revenue target. For the second quarter of fiscal 2027, Cisco expects revenue of $18.0 billion to $18.2 billion and non-GAAP earnings per share of $1.34 to $1.36. The forthcoming results will provide another indication of the trajectory for revenue and earnings after the first quarter.