Cisco Systems’ CSCO first-quarter fiscal 2026 networking revenues increased 15% on a year-over-year basis to $7.77 billion, driven by robust demand for AI infrastructure and campus networking solutions. The company’s networking portfolio, powered by Silicon One, AI-native security solutions and operating systems, is expanding CSCO’s AI footprint. AI infrastructure orders from hyperscalers hit $1.3 billion, and Cisco expects $3 billion in AI infrastructure revenues from hyperscalers in fiscal 2026.
Cisco sees a growing pipeline of more than $2 billion in orders for its high-performance networking products across sovereign, Neocloud and enterprise customers. Increasing AI workloads at the network edge and the emergence of physical AI are benefiting the industrial IoT portfolio. Rapid acceleration in the capacity requirements of the network due to unprecedented levels of network traffic and an ever-evolving threat landscape bodes well for Cisco’s prospects.
Integration of Cisco Nexus switches with NVIDIA’s NVDA Spectrum-X architecture is offering low-latency, high-speed networking for AI clusters, which is driving Cisco’s enterprise AI orders. CSCO’s new N9100 switch, based on Spectrum-X silicon, set to be released in the second half of fiscal 2026, is expected to enhance Cisco’s footprint among sovereign and neocloud providers. The launch of Cisco Unified Edge, an industry-first converged platform for the network edge, integrating compute, networking and storage into a single system, enables real-time inferencing for Agentic and physical AI workloads, is expected to boost enterprise adoption.
CSCO Faces Tough Competition in the Networking Domain
Cisco is facing stiff competition from Arista Networks ANET and Hewlett Packard Enterprise HPE in the networking domain.
Arista Networks holds a leadership position in 100-gigabit Ethernet switches and is increasingly gaining market traction in 200 and 400-gigabit high-performance switching products. Arista’s partnership with Fortinet combines the former’s fast, low-latency networking with the latter’s hardware-accelerated security to deliver a safe, scalable, zero-trust architecture for an AI data center. The launch of Arista’s R4 Series routers for AI and data centers is noteworthy, as it offers high performance, low power use, fast AI job completion and integrated security at a lower cost.
Hewlett Packard Enterprise views AI, Industrial Internet of Things (IoT), and distributed computing as the next major markets. The company has invested significantly over the past few years to enhance its capabilities across the aforementioned space. Hewlett Packard Enterprise has linked these businesses to its fast-growing networking business arm, Aruba Networks. The strategy will help Hewlett Packard Enterprise diversify its business from the server and hardware storage markets.
CSCO Share Price Performance, Valuation & Estimates
Cisco shares have appreciated 30.3% in the trailing 12-month period, outperforming the broader Zacks Computer and Technology sector’s return of 22.6%.
CSCO Stock Outperforms Sector
Image Source: Zacks Investment Research
CSCO stock is trading at a premium, with a trailing 12-month price/book of 6.58X compared with the Zacks Computer Networking industry’s 6.21X. Cisco has a Value Score of D.
CSCO Stock is Overvalued
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the second quarter of fiscal 2026 earnings is currently pegged at $1.02 per share, unchanged over the past 30 days, suggesting 8.5% growth from the figure reported in the year-ago quarter.
Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
Cisco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
