Cisco's Record Growth Reflects New AI Infrastructure Mojo
Cisco made a powerful statement about its role in AI infrastructure in its Q3 fiscal year 2026 earnings announcement (Cisco's FY ends in July), in which the company announced record sales numbers and accelerating growth on the back of new AI infrastructure products targeting both enterprises and hyperscale cloud providers.
Cisco reported revenue growth of 12% in the quarter ended April 25, to a record $15.8 billion. That’s up from $14.15 billion a year earlier. Net income rose to $3.37 billion, or 85 cents per share, up from $2.49 billion, or 62 cents per share, a year earlier. Cisco's shares were up 15% on the news in midday trading on Thursday.
The company cited enormous growth in demand for its networking products, including those targeted at the hyperscalers. This includes a completely refreshed Nexus One 9000 portfolio, which we analyzed here (disclosure: Cisco is a Futuriom client).
The growth came across the board, including enterprise campus and datacenter networking. Campus networking orders grew more than 25% year over year (y/y) and datacenter switching orders grew greater than 40% y/y.
The only downside in the quarterly announcement came when the company said it will continue to redraw its workforce by eliminating 4,000 jobs, or 5% of its roughly 86,000 employees. Cisco said this reorg is part of an effort to redirect its workforce toward high-growth areas such as AI infrastructure and security.
Product Orders and Guidance Up
Cisco's momentum is not likely to let up in the next quarter, as Cisco executives transmitted continued growth for the future, including three key design wins with hyperscalers, which haven’t yet been reflected in the numbers.
The company raised its fiscal 2026 full-year guidance to reflect a 35% jump in product orders. The company now projects annual revenue between $62.8 billion and $63 billion, exceeding previous estimates and boosting shares by up to 17%.
The conference call was notably bullish. “We are seeing broad-based, record-high demand for Cisco technology,” said Cisco CEO Chuck Robbins.
It's been quite a journey for Cisco over the past couple of years. Long thought of as a bellwether of the tech sector, Cisco investors had FOMO as little as two years ago, when they saw NVIDIA, Broadcom, and Arista Networks as the leaders in AI networking. After some big moves to reorganize and focus on AI infrastucture, those moves appear to be paying dividends. Cisco's catching up.
Investors have been flocking to Cisco in the past six months as a value play in the AI segment. Its shares are now up 50% YTD, while NVIDIA and Broadcom are both up 26%. Cisco is also only just starting to leverage its powerful partnership with NVIDIA, with jointly developed AI infrastructure solutions including networking, storage, compute, and automation.
This quarter's results show proof that a product refresh is starting to pay dividends for Cisco. Cisco N9000 Series includes a flexible architecture that can adopt many different forms of silicon, including Cisco’s own Silicon One as well as NVIDIA Spectrum-X technologies. Operating systems are also flexible and can include Cisco ACI, NX-OS, or SONiC. Cisco can also sell its Silicon One as an independent product, competing directly with Broadcom's merchant silicon.
The Cisco Silicon One P200 is a 51.2-Tb/s, full-duplex, deep-buffer networking processor designed for high-performance AI datacenter interconnects. Launched in October 2025, it enables "scale-across" networking to link multiple AI datacenters up to 1,000 km apart. The Cisco Silicon One G300 is a 102.4-Tb/s, 3nm switching processor designed to power AI datacenter networking.
Although the customers were not named, Cisco said it has won its first two designs for Silicon One P200 systems for scale-across applications, with a third P200 win confirmed in early Q4 2026. It also said it had a design win for G200-powered systems.
Silicon One and Optics as a Differentiator
Robbins spoke at length about the differentiation provided by Cisco having its own custom silicon as well as its own optical components. As cloud providers and enterprises alike deploy complicated AI systems, both component shortages as well as failures of third-party components have frustrated some customers. This is driving customers to seek more integrated AI systems with reliable and predictable components. This is becoming part of Cisco’s sales advantage.
"The reason we are winning is because of Silicon One,” said Robbins on the Q&A portion of the conference call. “As we move to the future, if you don't have silicon you will struggle to be relevant to the hyperscalers... it's a massive differentiator. It also gives us more control over the supply chain."
Indeed, supply chain issues are coming to the fore in the infrastructure industry, with shortage of optical components, chips, and memory, as I recently pointed out in Forbes. Cisco has recognized this challenge and has made controlling its own supply chain a priority.
Futuriom Take: Cisco's revitalized numbers show its product refresh have put it at the center of AI infrastructure deals, fueled by its strategy to supply a full stack of integrated AI networking hardware and software, including its own optics and custom silicon.
