Shares of Cisco Systems CSCO fell as much as 8.4% in the immediate trading session following the release of its fourth-quarter and full-year fiscal 2026 financial results. Despite reporting record quarterly revenues of $17.3 billion and solid earnings that topped Wall Street estimates, investors remained skeptical of the company’s compressed gross margin guidance.
For long-term investors, this post-earnings sell-off may present a compelling buying opportunity, considering Cisco’s dominant position in the expanding artificial intelligence (AI) ecosystem. The company is capitalizing on rapid, AI-driven demand from hyperscalers, which enabled it to generate a solid $4 billion in AI infrastructure orders in the fiscal fourth quarter, bringing its total fiscal 2026 AI order pipeline to $9.3 billion.
However, direct investment in CSCO shares carries clear single-stock risks. As Cisco expands its footprint in AI data center networking, it faces stiff competition from established players in the industry. If Cisco's Ethernet-based architectures face adoption delays against proprietary alternatives like InfiniBand, or if lower-margin AI hardware shipments continue to pressure profitability, the stock could face continued valuation adjustments.
For investors seeking to capture Cisco's AI-driven growth trajectory without taking on individual stock risk, exchange-traded funds (ETFs) with heavy allocations to CSCO offer a prudent alternative. This basket approach allows investors to gain exposure to Cisco and the broader networking hardware sector while cushioning against single-stock volatility, margin pressures, and macroeconomic shifts.
Before evaluating these ETFs, let us take a closer look at Cisco's fiscal fourth-quarter performance across key operating metrics.
A Brief Analysis of CSCO's Q4 Results
Cisco's earnings beat the Zacks Consensus Estimate by 4.3%, while revenues topped the mark by 2.4%. On a year-over-year basis, the company registered double-digit growth in its top and bottom-line numbers.
The reported quarter marked the eighth consecutive quarter of double-digit growth for Cisco’s networking portfolio overall, in line with the company’s view that it is in the midst of a multiyear, multibillion-dollar networking supercycle.
Cisco’s industrial IoT portfolio achieved its ninth consecutive quarter of double-digit order growth, driven by accelerating demand across manufacturing, utilities, and data center facilities in the fiscal fourth quarter. This sustained momentum is fueled by strong demand for ruggedized networking hardware built to operate in harsh environmental conditions.
Circuit, Cisco’s proprietary on-premises AI assistant, is now fully integrated into the company’s operations and supported more than 75 million prompts during the reported quarter.
Looking ahead, CSCO’s management projects AI infrastructure revenues alone to scale to $7.5 billion in fiscal 2027 as cloud titans build out their next-generation data centers.
The company expects multiple AI design wins across its Silicon One chip families and Optics over the next six months, driven by strong hyperscaler demand for its scalable, programmable architecture.
By fully integrating Silicon One across its networking systems by fiscal 2029, Cisco aims to gain control over its supply chain, silicon, systems, and software to deliver superior performance, security, and market share growth.
CSCO-Heavy ETFs to Buy
iShares U.S. Telecommunications ETF IYZ
This fund, with net assets worth $1.27 billion, offers exposure to 24 U.S. companies that provide telephone and internet products, services, and technologies. Of these, Cisco carries the first spot, holding 20.86% of the fund.
IYZ has gained 29.3% year to date and charges 37 basis points (bps) as fees. It traded at a volume of 0.66 million shares in the last trading session.
First Trust Dow Jones Internet ETF FDN
This fund, with net assets worth $5.41 billion, offers exposure to 41 U.S. companies from the Internet industry. Of these, Cisco carries the third spot, holding 7.38% of the fund.
FDN has rallied 8.3% year to date and charges 49 bps as fees. It traded at a volume of 0.26 million shares in the last trading session.
First Trust NASDAQ Cybersecurity ETF CIBR
This fund, with net assets worth $15.84 billion, offers exposure to 42 companies engaged in the cybersecurity segment of the technology and industrials sectors. It includes companies primarily engaged in developing, implementing, and managing security protocols for private and public networks, computers, and mobile devices to protect data integrity and network operations. Of these, Cisco carries the fourth spot, holding 6.64% of the fund.
CIBR has surged 39.4% year to date and charges 58 bps as fees. It traded at a good volume of 1.29 million shares in the last trading session.
Amplify Cybersecurity ETF HACK
With net assets of $3.04 billion, this fund provides exposure to 23 companies actively involved in delivering cybersecurity hardware, software, and services. Of these, Cisco carries the seventh spot, holding 4.88% of the fund.
HACK has soared 47.1% year to date and charges 60 bps as fees. It traded at a volume of 0.23 million shares in the last trading session.
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Cisco Systems, Inc. (CSCO): Free Stock Analysis Report
Amplify Cybersecurity ETF (HACK): ETF Research Reports
First Trust Dow Jones Internet ETF (FDN): ETF Research Reports
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
iShares U.S. Telecommunications ETF (IYZ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).