Cisco's Strong Start to FY 2026 Driven by AI and Networking Demand

Cisco has reported a robust start to its fiscal year 2026 with first quarter earnings surpassing prior guidance. As the networking giant positions itself at the heart of AI infrastructure, the company has seen substantial growth across its core segments, particularly buoyed by demand for AI-driven networking solutions.

Revenue and Earnings

For the quarter, Cisco reported revenue of $14.9 billion, marking an 8% increase from the previous year. This was driven by strong demand for AI infrastructure and campus networking solutions, which pushed total product revenue up by 10% to $11.1 billion. Non-GAAP net income saw a 9% increase to $4 billion, contributing to non-GAAP earnings per share growth of 10% to $1.

Product Orders and Market Performance

Cisco's product orders experienced a 13% year-over-year increase, with significant contributions from every geographic segment. Particularly poignant was the strength found within the service provider and cloud market, which posted a robust 45% growth. The Americas led the charge with a 16% increase in orders, emphasizing the broad-based demand for Cisco’s technology across customer types.

Networking and AI Infrastructure

The networking segment was a standout performer, realizing a 15% growth rate. The enterprise routing and data center switching areas contributed strong double-digit growth, underpinned by advancing demands for AI workloads and secure enterprise infrastructures. Orders specifically for AI infrastructure systems surged, achieving a milestone of $1.3 billion, showcasing Cisco’s strategic focus on future-forward technologies.

Shareholder Returns

Financial discipline and operational efficiencies enabled Cisco to maintain solid margins and cash flows, returning $3.6 billion to shareholders through dividends and share repurchases, amounting to 125% of free cash flow this quarter.

Key Drivers and Strategic Outlook

Cisco is leveraging its comprehensive portfolio to capitalize on the growing AI landscape, with its Silicon One systems and optical technologies receiving widespread adoption among hyperscale customers. Despite challenges from legacy security products, the shift towards cloud-based security offerings through its Splunk acquisition is expected to yield long-term growth.

As Cisco continues to navigate the evolving tech landscape, its strategic investments in AI and deepening engagements across enterprises showcase its intent to stay at the forefront, with its current momentum indicating an optimism for what could be its most successful fiscal year yet.