Cisco's stock drops 7% on mediocre forecast even as earnings and revenue top estimates

NoodlesOrTokens · 2026-02-11T22:20:31+00:00

Cisco reported strong quarterly earnings with revenue growth and increased net income, but its stock fell 7% due to guidance meeting expectations. The company anticipates modest growth amid rising memory costs and plans to contribute to AI infrastructure projects.

NoodlesOrTokens

2026-02-11 22:20:31

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Cisco CEO Chuck Robbins appears at the World Economic Forum in Davos, Switzerland, on Jan. 21, 2026.

Krisztian Bocsi | Bloomberg | Getty Images

Cisco reported better-than-expected quarterly results on Wednesday, but the stock dropped about 7% in extended trading as earnings guidance for the current period only met estimates.

Here’s how the company did in comparison with LSEG consensus:

Earnings per share: $1.04 adjusted vs. $1.02 expected
Revenue: $15.35 billion vs. $15.12 billion expected

Cisco’s revenue grew about 10% from $14 billion a year earlier, according to a statement. Net income increased to $3.18 billion, or 80 cents per share, from $2.43 billion, or 61 cents per share, in the same quarter a year ago. The adjusted figure excludes stock-based compensation costs.

For the current period, Cisco expects $1.02 to $1.04 in adjusted earnings per share and $15.4 billion to $15.6 billion in revenue. Analysts polled by LSEG were looking for $1.03 per share and $15.18 billion in revenue.

Investors have been looking for Cisco to play a more central role in the artificial intelligence boom, which has lifted chipmakers and providers of other data center technologies. Cisco is seeing some growth acceleration, reporting $2.1 billion in AI infrastructure orders from hyperscalers during the quarter.

Cisco’s core networking revenue increased 21% from a year earlier to $8.3 billion. Analysts polled by StreetAccount were looking for $7.9 billion.

During the quarter, Cisco said it would provide products for an AI infrastructure project in Saudi Arabia alongside Advanced Micro Devices. Cisco also announced the launch of a networking switch that contains an Nvidia chip.

“On the sovereign side, there’s really no real need nor expectation for meaningful impact in FY26,” Cisco CEO Chuck Robbins said on a conference call with analysts. “And so we don’t need that to actually accelerate for the guide that we’ve, that we’ve provided. It’s purely upside.”

The ramping up of revenue from neoclouds, which are cloud providers that are younger than mature entities such as Amazon and Microsoft, should start in the second half of the current fiscal year and become more pronounced in the 2027 fiscal year, Robbins said.

Rising prices of memory because of sharp demand for Nvidia graphics processing units have been affecting a variety of equipment companies. Cisco has announced price hikes and is adjusting contracts with channel partners, Robbins said.

For the 2026 fiscal year, Cisco is targeting $4.13 to $4.17 in adjusted earnings per share and $61.2 billion to $61.7 billion in revenue, which implies 8.5% growth. The LSEG consensus showed earnings of $4.12 per share, with $60.74 billion in revenue.

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