Networking technology giant Cisco (NASDAQ:CSCO) reported Q2 CY2026 results exceeding the market\u2019s revenue expectations, with sales up 17.6% year on year to $17.25 billion. On top of that, next quarter\u2019s revenue guidance ($18.1 billion at the midpoint) was surprisingly good and 8.1% above what analysts were expecting. Its non-GAAP profit of $1.22 per share was 4.4% above analysts\u2019 consensus estimates. <\/p>\n
Is now the time to buy CSCO? Find out in our full research report (it\u2019s free for active Edge members). <\/a><\/p>\n Cisco (CSCO) Q2 CY2026 Highlights:Revenue: $17.25 billion vs analyst estimates of $16.83 billion (17.6% year-on-year growth, 2.5% beat)Adjusted EPS: $1.22 vs analyst estimates of $1.17 (4.4% beat)Revenue Guidance for Q3 CY2026 is $18.1 billion at the midpoint, above analyst estimates of $16.75 billion Adjusted EPS guidance for the upcoming financial year 2027 is $5.08 at the midpoint, beating analyst estimates by 5.9%Operating Margin: 24.7%, up from 21% in the same quarter last yearAnnual Recurring Revenue: $32.1 billion (3.2% year-on-year growth, beat)Billings: $18.52 billion at quarter end, up 19.8% year on yearMarket Capitalization: $488.3 billionStockStory\u2019s Take<\/p>\n Cisco\u2019s latest quarter exceeded Wall Street\u2019s revenue and adjusted profit expectations, but the market response was negative. Management attributed the strong sales to a surge in demand for AI-driven networking infrastructure, particularly from hyperscale cloud providers and enterprise customers, as well as robust product order momentum across geographies and segments. CEO Charles Robbins highlighted, \u201cWe delivered record revenue…with product revenue up 24% year-over-year,\u201d citing broad-based demand and a multi-year networking upgrade cycle as key contributors. However, management also acknowledged that margin headwinds from higher hardware mix and memory costs impacted gross margins, despite overall operating efficiency gains.<\/p>\n Looking forward, Cisco\u2019s guidance is underpinned by expectations for continued growth from AI infrastructure, expanding adoption of its Silicon One platform, and momentum in security and observability solutions. Management believes the company is in the early stages of a \u201cnetworking super cycle\u201d as organizations modernize for distributed AI workloads and prepare for emerging security threats, including quantum computing risks. CFO Mark Patterson noted, \u201cWe see acceleration in both top and bottom line growth,\u201d while Robbins emphasized the unique opportunity in AI networking and the strategic role of Cisco\u2019s vertically integrated stack in supporting customers\u2019 evolving infrastructure needs.<\/p>\n Key Insights from Management\u2019s Remarks<\/p>\n Management credited the quarter\u2019s outperformance to sustained AI infrastructure demand, broad-based growth in enterprise and public sector orders, and the compounding effects of new product launches and platform integration.<\/p>\n AI infrastructure demand accelerated: Orders from hyperscale cloud customers for AI networking solutions grew sharply, with total AI-related orders reaching $4 billion in the quarter and $9.3 billion for the year. The mix was approximately 60% Silicon One-based systems and 40% optics, reflecting Cisco\u2019s ability to serve distributed, high-bandwidth AI workloads across data centers. Networking portfolio strength: Q2 marked the eighth consecutive quarter of double-digit growth in networking, spanning service provider routing, data center and campus switching, wireless, and industrial IoT (internet of things) products. Management noted that more than half of customers are now purchasing both campus and data center networking solutions, reinforcing the value of Cisco\u2019s integrated platform approach. Security and observability momentum: Cisco\u2019s security portfolio, including Splunk, saw double-digit order growth, driven by increased adoption of unified security solutions and new AI-powered offerings like Secure Access, XDR, HyperShield, and AI Defense. Firewalls grew over 30%, and the company emphasized its ability to help customers address post-quantum cryptography risks. Platform and product innovation: The launch of Cisco Cloud Control\u2014a unified management platform with AI Canvas and Cisco IQ\u2014has attracted nearly 4,500 enterprise signups, streamlining network troubleshooting and highlighting the shift toward platform-based IT management. New tools for cybersecurity professionals, such as Antares, further expand Cisco\u2019s AI-driven product pipeline. Order momentum across customer types: Product orders from service provider and cloud customers grew 95%, while enterprise and public sector orders accelerated to 21% and 30% growth, respectively. Telco orders also climbed over 30%, and industrial IoT demand continued its multi-quarter double-digit growth streak, reflecting broad-based technology investment. Drivers of Future Performance<\/p>\n Cisco\u2019s outlook reflects expectations for robust AI networking demand, ongoing campus and data center refresh cycles, and a strategic push into security and observability despite hardware margin pressures.<\/p>\n AI networking cycle expansion: Management expects continued growth from AI infrastructure for hyperscalers, projecting $7.5 billion in AI infrastructure revenue next year. The company anticipates further design wins with cloud and enterprise customers, as demand grows for distributed, scalable, and secure networking solutions to support complex AI workloads across hybrid environments. Security and software growth: Cisco forecasts an acceleration in security and observability revenue, with security expected to shift from low single digit to high single digit growth as new AI-powered offerings and Splunk integration gain traction. Management views these segments as important contributors to future operating leverage and profitability. Margin and supply chain management: Hardware-driven growth is expected to pressure gross margins slightly, but operating margin is projected to reach a company high due to disciplined expense management and minimal incremental costs to capture AI-related opportunities. Management also highlighted confidence in supply chain resilience and the ability to fulfill rising demand, citing direct relationships with key suppliers like TSMC. Catalysts in Upcoming Quarters<\/p>\n In the coming quarters, the StockStory team will be monitoring (1) the pace of AI infrastructure adoption and new design wins across hyperscaler and enterprise customers, (2) the success of Cisco\u2019s security and observability product integration\u2014especially Splunk and new AI-powered offerings, and (3) the company\u2019s ability to maintain operating margin discipline amid hardware-driven revenue growth. Execution on supply chain efficiency and continued customer platform adoption will also be critical signposts for sustainable growth.<\/p>\n Cisco currently trades at $118.87, down from $124.32 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it\u2019s free)<\/a>. <\/p>\n Our Favorite Stocks Right Now <\/p>\n WHILE YOU\u2019RE HERE: Top 9 Market-Beating Stocks. The best stocks don\u2019t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.<\/p>\n But our AI platform says the party isn\u2019t over. Find out which 9 stocks made the cut this week \u2014 FREE. Get Our Top 9 Market-Beating Stocks for Free HERE<\/a>.<\/p>\n Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"Networking technology giant Cisco (NASDAQ:CSCO) reported Q2 CY2026 results exceeding the market\u2019s revenue expectations, with sales up 17.6%…\n","protected":false},"author":2,"featured_media":138429,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,25,68384,6060,5724],"class_list":["post-138428","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ai","tag-ai","tag-artificial-intelligence","tag-csco-earnings-call","tag-financial-analysis","tag-stock-market-news"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/138428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=138428"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/138428\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/138429"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=138428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=138428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=138428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}