Cisco Systems (CSCO) shares surged more than 13%, despite layoffs, after the company posted record quarterly revenue and revealed a bold restructuring plan designed to reallocate resources toward artificial intelligence and other high-growth areas.
The networking giant is a company pivoting from a position of strength, and the numbers back that up. If you have been sitting on the fence about Cisco stock, this earnings report gives you a concrete reason to pay attention.
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www.barchart.com Cisco's AI Orders Are Exploding
The headline number that stopped Wall Street in its tracks was Cisco's AI infrastructure orders from hyperscalers.
The company reported $1.9 billion in AI infrastructure orders in the third quarter of fiscal year 2026. Year to date, that figure has reached $5.3 billion, already exceeding the full-year target Cisco set just a quarter ago. Management now expects to report $9 billion in AI infrastructure orders from hyperscalers for the full fiscal year. That is 4.5 times what it delivered in fiscal year 2025. Five of the top hyperscalers each grew orders at triple-digit rates year-over-year.Cisco's Acacia optics business, which makes the high-speed coherent pluggable optics that power AI data centers, had its strongest quarter ever with more than $1 billion in orders. Acacia is now on track to grow over 200% for the full year.
The post-market move “validates that this capex is about more than just chips,” as Ryan Lee, senior vice president of product and strategy at Direxion, put it after the results came in.
The buildout of AI infrastructure spans networking and optics, too, and Cisco holds a significant share of that market.
Record Revenue Amid Broad-Based Demand
Total revenue in the third quarter came in at $15.8 billion, up 12% year-over-year and above the high end of Cisco's own guidance. Product revenue grew 17%, driven by both AI infrastructure and a campus networking refresh cycle that shows no signs of slowing.
Total product orders grew 35% year-over-year. Even after stripping out the hyperscaler orders, which grew in the triple digits, the rest of the business was up 19%. Enterprise orders rose 18%, and public sector orders jumped 27%. Wireless orders hit a record, growing more than 40%, with WiFi 7 now making up half the wireless mix.
Non-GAAP earnings per share rose by 10% to $1.06. For the full fiscal year 2026, Cisco forecasts revenue between $62.8 billion and $63 billion with EPS of $4.28.
A Focus on Cost Savings
The job cuts represent fewer than 4,000 positions, or less than 5% of Cisco's roughly 86,200 employees. The restructuring is expected to cost up to $1 billion, with about $450 million allocated for Q4. CEO Chuck Robbins was direct about the intent.
"The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," Robbins said in a statement.
The company is leaning into silicon, optics, security, and AI. It is trimming roles in areas that no longer fit that roadmap.
Cisco returned $2.9 billion to shareholders in Q3, through both dividends and buybacks. It has $9.6 billion remaining under its repurchase program and $16.6 billion in cash and investments on its balance sheet.
Cisco is a company that generates serious free cash flow while simultaneously investing in its future.
What Is the Cisco Stock Price Target?
Cisco’s research, conducted with around 3,500 technology leaders, found that 93% are accelerating their network modernization plans as AI-driven traffic is expected to triple over the next three years. It is evident that Cisco's growth story is far from over.
www.barchart.com Analysts tracking Cisco stock forecast EPS to expand from $3.81 per share in fiscal 2025 to $5.68 in fiscal 2030. If Cisco stock is priced at 20x forward earnings, which is below its current multiple of 24.8x, it could deliver roughly 35% returns over the next five years, excluding dividends.
Out of the 25 analysts covering Cisco stock, 14 recommend “Strong Buy," one recommends “Moderate Buy,” and 10 recommend “Hold.” The average CSCO stock price target is $89, below the current price of $115.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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