Cisco kicked off fiscal 2026 with a strong start, posting total revenue of $14.9 billion for Q1, up 8% year over year, and non-GAAP earnings per share (EPS) of $1.00, up 10%. Management attributed the outperformance to broad-based demand for AI‑infrastructure, campus networking, and secure networking solutions, coupled with operating efficiencies that supported margin expansion. AI infrastructure orders totaled $1.3 billion in Q1, signaling accelerating demand from hyperscalers and the broader AI ecosystem. Cisco projects roughly $3 billion of AI infrastructure revenue from hyperscalers in FY2026, and management indicated a multi‑year, multibillion-dollar opportunity driven by scale‑out AI, data center interconnect, and edge compute.
Strategically, Cisco is advancing its AI‑ready data center and edge architecture (Silicon One, P200 chip, N9100 switch) while expanding ecosystem partnerships (NVIDIA, G42 with AMD GPUs, NVIDIA collaboration) and introducing new edge and sovereign/national infrastructure capabilities. The company also highlighted stepped-up investments in security (XDR, HyperShield, AI Defense, refreshed firewalls) and expanded Splunk adoption, albeit with a timing shift in revenue recognition as Splunk moves to cloud subscriptions. The QQ1 results reinforce Cisco’s core strengths—large installed base, diversified product and service mix, and strong cash flow—to fund a disciplined capital returns program and R&D investments aimed at AI‑first networking.
Looking ahead, Cisco reaffirmed a durable growth trajectory with Q2 revenue guidance of $15.0–$15.2 billion and FY2026 revenue of $60.2–$61.0 billion, supported by continued AI infra momentum, broad product refreshes, and higher‑margin recurring software revenues. However, investors should monitor near‑term challenges including supply/demand mix shifts from cloud/SaaS transitions (notably Splunk cloud ARR growth) and tougher year‑over‑year comparisons in the back half of FY2026. Overall, the setup remains constructive for shareholders given the combination of AI-driven growth, operating leverage, and a robust balance sheet.