Cisco Raised AI Orders to $9B — And Now the Stock Is Attacking $124.62 Trendline Breakout

AI infrastructure order expectations for fiscal 2026 from Cisco Systems were at $5 billion. By the end of Q3, Cisco Systems had already booked $5.3 billion of orders, thus prompting management to increase the order expectations to an unprecedented $9 billion, which is an 80% increase on the original expectations. This is signaling AI networking demand is accelerated.

The $9 billion target for orders by Fiscal 2027 locks in a large pipeline. These orders are not speculation; they are contracts signed by AWS, Google Cloud, Meta, Microsoft, and other hyperscalers to expand their AI data center. Cisco's opportunity is to provide networking infrastructure at the edge of AI Accelerators. This consists of switching, routing, optics, and chipsets that allow GPU, CPU, and memory cluster interconnectivity over high-speed links.

In addition to the expected hyperscaler AI spending, Cisco is experiencing two more demand cycles. The first is campus networking. Enterprises are beginning a multi-year refresh as they upgrade their Wi-Fi, adopt Wi-Fi 7, and integrate AI applications. Cisco reported 25% + growth in campus orders year over year in Q3. The third cycle is security: organizations deploying autonomous agents will need identity controls, visibility into the network, and improved threat detection. While security revenue is flat (which is a concern), pure-play competitors like CrowdStrike are growing in the double digits.

Cisco hit a revenue milestone of $15.8 billion for Q3 FY2026, a 12% increase year over year. For Q3, orders for Cisco products grew by 35% and networking orders by 50% while data center switching orders grew by 40%. The Semiconductor Systems division grew by $5.97 billion with an operating margin of 35.1%. Applied Global Services grew by $1.67 billion with an operating margin of 29.2%. The quarterly dividend increase was 15%, bringing it to $0.53 per share.

For Q4, the current consensus is revenue in the range of $16.7–16.9 billion with an adjusted EPS of $1.16–1.18 and an adjusted gross margin of 65.5–66.5%. Management expects the FY2026 adjusted operating margin to be in the 34–35% range. Hitting these targets would continue to support the phenomenal momentum during the current AI, campus, and security cycles.

Not all areas of the Cisco portfolio are performing well. Flat year-over-year growth in security product sales during Q3 was met with an increase of just 3% in the Observability area. Security AI should create a large market opportunity. Instead, security product sales for Cisco have stalled, and competitors, such as CrowdStrike, continue to see double digit growth. Operating cash flows have been positive with acquisitions, such as NeuralFabric and EzDubs, but investors have not seen an impact with accelerating revenues.

Cisco has a challenging technical inflection point with its price at $123.88 and an approach to $124.62 on the daily chart. A key area of support was at $119.65, which the price has successfully bounced from and forming higher lows as a result. A break beyond $124.62 would create an important breakout and shift focus to $129.75, the previous major swing high and resistance.

Breakouts are likely with the current price action and setup. RSI has formed a legitimate uptrend with a current value of approximately 63, while remaining well in neutral territory. There is additional support with Cisco trading well above its moving averages at $114.85 and $107.21.

CSCO Price Chart - Source: Tradingview

For the bulls, $124.62 will remain the next major area of resistance to break. A break beyond the resistance may lead to a reversal at $119.65, which will continue to strengthen the current setup. Beyond that, key areas of support are located at $116.26 and $114.85.

Key Levels (Aug 12, Earnings Tonight)

• Critical breakout level:  $124.62 (descending trendline + horizontal resistance)
• Extended target if breakout holds:  $129.75 (previous major swing high)
• Key pivot support:  $119.65 (repeated defense zone)
• Secondary support:  $116.26, $114.85 (moving average cluster)
• Deeper support:  $111.70
• Current price:  $123.88 (below breakout, testing resistance)
• RSI:  63 (strong momentum, room to extend)
• 50 EMA:  $114.85 (rising, supporting structure)
• 100 EMA:  $107.21 (rising, supporting structure)

Key Metrics:

Will Rivian Corporation report expected revenues in the range of $16.7B to $16.9B?

Will adjusted EPS be in the range of $1.16 to $1.18?

Will FY2026 AI order commitments move toward the $9B goal?

Did gross margins stay in the range of 65.5% to 66.5%?

What is the range for fiscal 2027 revenue?

What was management's commentary regarding the sustainability of the AI and campus cycles within FY2027? If Cisco crosses the set targets of revenue and earnings, fulfillment of the $9B goal of AI orders and holding gross margins at 66% supported with a solid FY2027 outlook, the stock may open at $124.62 and surge to $129.75. If any of the targets are missed with Security holding back, consolidation at $119.65 is expected.

Cisco has strong fundamentals. AI orders have increased from $5B to $9B, Q3 revenues increased by 12% YOY, and the company has signaled expectations of 30%+ equipment growth along with three simultaneous cyclical trends of Hyperscaler AI, campus refresh, and security evolution. Q3 orders increased by 35% for products and 50% for networking.

From a technical standpoint, CSCO is approaching the $124.62 level, which was the previous resistance, and is currently trading above its support at $119.65. The RSI is at 63 and indicates that CSCO is trading at an overbought level. A daily close at $124.62 would allow CSCO to rally to $129.75. For traders, it is worth noting the potential for a trading gap after the earnings report and confirming $124.62. A beat on the earnings report and strong guidance for FY2027 has the potential to drive CSCO to $130. This is for analysis and not for investments. A bullish case would form if $124.62 breaks and confirms earnings.