Cisco Systems (CSCO) shares extended gains in after-hours trading on Wednesday after the networking giant reported fiscal third-quarter results that comfortably beat expectations and raised its full-year guidance, driven by surging demand for artificial intelligence infrastructure.
Revenue for the quarter came in at a record $15.8 billion, up 12% year-over-year and well above the analyst consensus of $15.3 billion. Adjusted earnings per share reached $1.06, topping the $1.03 estimate and marking a 10% increase from the same period last year. The beat was powered largely by networking revenue of $8.8 billion, where high-margin data center switches saw orders rise more than 40%. This performance helped Cisco maintain a strong adjusted gross margin of 66%, effectively defying earlier concerns about rising memory costs that had pressured margins in the previous quarter.
The most bullish signal came from Cisco’s AI-related business. The company dramatically increased its 2026 artificial intelligence order guidance from $5 billion to $9 billion, with $5.3 billion in AI orders already booked year-to-date. Analysts see this as evidence that Cisco’s Ethernet-based fabrics and custom silicon—particularly the Silicon One architecture—are becoming critical components of large-scale GPU clusters, placing the firm in the same competitive lane as pure-play hardware accelerators. Management also raised full-year revenue guidance to $63 billion and highlighted a backlog of $43.5 billion in remaining performance obligations, providing strong visibility into 2027.
Heading into the report, Wall Street had been cautious due to memory cost headwinds and a post-earnings selloff in February when gross margins missed estimates. However, the latest results showed Cisco successfully offsetting input costs through a mix shift to higher-value, AI-ready products. The stock, which closed the regular session at $100.70 (up 30% year-to-date and 63% over 12 months), rallied further in extended trading. The company also declared a $0.42 quarterly dividend and executed $1.3 billion in share buybacks during the quarter, reinforcing shareholder returns. Insider selling had totaled $4.8 million over the past three months with no reported buying, but the robust guidance and AI momentum appeared to overshadow those concerns.
