Cisco Q4 Slightly Beats Expectations — Strong AI Orders, But Lackluster Full-Year Guidance Raises Concerns?

TradingKey - Cisco Systems (CSCO.US) released its fiscal fourth-quarter 2025 results (ended July 26) after the market close on Wednesday. The company delivered a modest beat, but its underwhelming full-year outlook for fiscal 2026 led to a decline in after-hours trading.

The company reported revenue of $14.76 billion, up 7.6% year-over-year, and net income of $2.82 billion, or $0.71 per share, compared to $0.54 in the same quarter last year. By segment, networking revenue reached $7.63 billion, up 12% YoY — significantly surpassing the expected $7.34 billion and emerging as the standout performer. However, security revenue came in at $1.95 billion, up 9% but below the $2.11 billion forecast.

While the quarter was solid, investors focused more on forward guidance. For the first quarter of fiscal 2026, Cisco expects adjusted EPS of $0.97–$0.99 and revenue of $14.65–$14.85 billion, slightly above consensus. But its full-year forecast — adjusted EPS of $4.00–$4.06 and revenue of $59.0–$60.0 billion — was largely in line with LSEG consensus (EPS $4.03, revenue $595.3 billion), with no upward revision or growth acceleration signaled, disappointing those hoping for a stronger outlook.

On the AI front, Cisco is making bold moves. The company announced partnerships with BlackRock and Microsoft to invest in AI infrastructure and is participating in the “Stargate” data center project in the Middle East, backed by OpenAI and SoftBank. CEO Chuck Robbins revealed that AI infrastructure orders reached $800 million in the quarter, with over $2 billion accumulated in fiscal 2025 — double the original target. Around $1 billion of that was spent on back-end networking for GPU clusters. “I don’t think AI is a fad,” Robbins emphasized.

However, CFO Mark Patterson acknowledged that despite some clarity on tariffs, the company still faces a “complex operating environment.”

Cisco’s stock has risen 19% year-to-date, outperforming the S&P 500. Yet, the lack of a strong growth catalyst in the guidance led investors to take profits after the report, reflecting a cautious market sentiment: for tech stocks, “buy the rumor, sell the news” remains a dominant trading pattern.