On Thursday, Cisco's stock dropped 9% even though the company posted quarterly results that exceeded forecasts and offered an optimistic outlook that didn't win over investors. Management projected current-quarter sales in the range of $18 billion to $18.2 billion, exceeding the $16.8 billion consensus figure from LSEG. For the fiscal fourth quarter, year-over-year revenue climbed 18%.
Before the selloff, shares had gained over 60% in 2025, with the firm beginning to demonstrate gains from the artificial intelligence boom. Although the current-year forecast is strong, with a projected 15% revenue increase, analysts expect growth to decelerate to single digits in the following fiscal year.
Growing optimism that Cisco was benefiting from the AI boom was fueled by the company's ability to secure large-scale orders from hyperscaler data center operators. However, the market's muted reaction to the latest earnings suggests that much of the good news may already be priced in, and investors are looking for signs of sustained momentum beyond the current fiscal year. The conservative guidance, while above consensus, adds to the uncertainty, as it may indicate that management is bracing for a potential slowdown in enterprise spending or increased competition in the networking market.
Chuck Robbins, the CEO, emphasized the company's all-around strong performance. "We had a record year, we had a record quarter," Robbins told CNBC's Jim Cramer on Thursday. After providing guidance that exceeded expectations, Robbins said analysts asked him, "Why are you being so conservative?"
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In a post-earnings note, analysts from Piper Sandler said Cisco reported solid quarterly figures, but the company's outlook "looks conservative given the current demand environment." The analysts, who rate the stock as a hold, added that some investors "may start to nitpick that we're seeing patient."
KeyBanc Capital Markets analysts are also optimistic and are maintaining a buy rating on the stock. They expressed confidence that Cisco will gain market share as hyperscalers boost spending and neoclouds expand their operations.
Cisco reported that hyperscalers placed $4 billion in infrastructure orders during the quarter, bringing the fiscal-year total to $9.3 billion. That customer group generated roughly $4 billion in revenue for the past fiscal year, and Cisco projects that figure will nearly double to $7.5 billion in the next five years.
The company's guidance for the current quarter was above analysts' expectations, but some analysts viewed it as conservative. The demand from hyperscalers and neoclouds is expected to drive growth, according to KeyBanc.
Beyond the immediate numbers, Cisco's strategic pivot toward AI infrastructure marks a significant shift from its traditional networking hardware roots. The company has been aggressively courting cloud providers and large data center operators, aiming to become a key supplier of switches, routers, and optical systems tailored for AI workloads. This transition, while promising, carries execution risks as the competitive landscape intensifies.
Investors are watching whether Cisco can sustain its order momentum and convert backlog into recurring revenue, especially as enterprise customers remain cautious with IT budgets. The stock's sharp decline after the earnings report suggests that Wall Street is demanding clearer evidence of long-term growth durability rather than a single strong quarter.
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