The sovereign AI partnership that Cisco (CSCO) is entering into with Bell Canada (BCE) is adding another potential growth channel to Cisco’s growing AI infrastructure business, against the backdrop of record fiscal 2026 performance, which suggests accelerating demand in Cisco’s network products.
Network technology giant Cisco Systems continues expanding into the world of AI infrastructure. The two companies signed a memorandum of understanding on the development of sovereign AI infrastructure designed to serve the needs of the Canadian government agencies, regulated industries, and firms working with sensitive information.
More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.
The collaboration is important, as it comes at a time when Cisco is already witnessing considerable AI-related demand. The company has reported receiving $9.3 billion worth of orders from hyperscalers on AI infrastructure during fiscal 2026, while generating approximately $4 billion in revenues from such sales. Cisco expects AI infrastructure revenue to amount to about $7.5 billion in fiscal 2027. So, the deal with Bell Canada does not create Cisco’s AI opportunity out of thin air; rather, it adds another avenue for growth.
About Cisco Stock
California’s San Jose-based company Cisco Systems is one of the biggest network and communications technology providers in the world. Its portfolio includes various networking hardware, cybersecurity, observability solutions, collaboration technologies, and, lately, infrastructure to support AI workloads. At a price of about $114, Cisco boasts a market capitalization of approximately $444.8 billion.
Cisco shares have been performing well over the past year. Currently, the stock is trading some 70% higher than its 52-week low of $66.81 but is still some 13% below its 52-week high of $130.37. During the past five trading days, CSCO stock has advanced over 6%.
www.barchart.com Nevertheless, valuation could become a factor for investors to watch. Currently, Cisco trades at the forward price-earnings multiple of 24.64x and price-sales ratio of 6.99x. The valuation multiples point to the fact that investors have been already ascribing significant premium to the positive growth outlook of the company. It means that it would be even more challenging for Cisco to turn orders into revenues and profits.
Still, there is something else in this story. As per the plan, Bell Canada and Cisco would combine the former’s data centers, networking capabilities, power, and cooling systems with Cisco’s AI infrastructure and security, observability, and management technologies.
Furthermore, the companies will analyze the options of using Cisco’s AI PODs and Sovereign Critical Infrastructure technologies and look into the options of making AI computing infrastructure accessible or available for reservation to the customers. Sovereign AI is especially relevant for governments and regulated industries seeking control over the locations of data and AI workloads.
All-Time High Quarterly Earnings
Cisco had a strong finish to fiscal 2026. During the fourth quarter, the company’s revenue amounted to an all-time high of $17.3 billion, up 18% from the previous year. Cisco posted non-GAAP EPS of $1.22, up 23%, and GAAP EPS of $0.97, up 52%. Cisco noted that both the revenue and earnings beat the high end of its guidance range. In fiscal 2026, Cisco's revenues grew by 12% to $63.3 billion, while non-GAAP EPS rose by 14% to $4.33. Furthermore, GAAP EPS increased by 31% to $3.33, with a non-GAAP operating margin of 34.8% for the year.
However, what is most important is that demand was strong across the board. Orders for total products soared 35% during Q4, or 25% excluding hyperscalers. Networking product orders went up by 40%, with eight consecutive quarters of double-digit growth.
AI infrastructure was one of the best-performing categories. Cisco got $4 billion worth of orders from hyperscalers during Q4 alone, bringing the fiscal 2026 total orders to $9.3 billion. The company generated approximately $4 billion of revenue from its AI infrastructure business during fiscal 2026, while management expects this number to go to approximately $7.5 billion in fiscal 2027.
Cisco expects fiscal Q1 2027 revenue between $18 billion and $18.2 billion and non-GAAP EPS between $1.32 and $1.34. Guidance for the full year envisions $72.2 billion to $73.4 billion in revenue and non-GAAP EPS between $5.05 and $5.11.
The deal with Bell Canada can be viewed against this background. Hyperscalers are clearly an important source of demand for Cisco, but sovereign AI could give Cisco another way to access governments and highly-regulated enterprises that cannot simply put their workloads on regular public cloud infrastructures.
Analysts' Expectations for CSCO Stock
The wide range of price targets from Wall Street analysts suggests that there might still be room for CSCO stock to grow but also suggests a similarly wide range of disagreement among analysts. CSCO's “Moderate Buy” consensus rating is split pretty strongly between 17 “Buy” ratings (16 of which are “Strong Buy”) and 10 “Hold” ratings. The average analyst target price for Cisco is $133.08, and given the recent price of $113.84, that proposes a potential upside of about 17%. The expectations are broad, with the highest analyst target price of $165 implying substantial upside in case Cisco’s AI and networking growth continue accelerating. However, the lowest target price of $100, which is even below the current share price, proves that not everybody is convinced that the stock's valuation allows for mistakes.
www.barchart.com On the date of publication, Yiannis Zourmpanos 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.
More news from Barchart
How to Play CSCO Stock as Cisco Bets on Sovereign AI Michael Saylor Told Founders That 4 to 10 Years Is ‘Very Very Normal’ but Past 10, ‘You’re Probably Not Cut Out for the Business’ Amid the Weakness, Data Center Trade Prologis Stock Offers an Incredible Deal Goldman Sachs Falls 20% From Record High and Enters Into Bears Market. How to Play GS Stock Here.