Cisco shares rise 7% on strong Q1 results, $1.3b in AI orders

Cisco’s stock rose over 7% in after-hours trading after the company reported better-than-expected earnings for its fiscal Q1 2026.

The networking giant posted adjusted earnings per share of US$1, topping analyst expectations of 98 cents, while revenue hit US$14.9 billion, above the projected US$14.8 billion.

Revenue was up 8% year-on-year, marking the company’s fourth consecutive quarter of growth after a period of declines.

Net income climbed to US$2.9 billion, or 72 cents per share, from US$2.7 billion, or 68 cents per share, a year ago.

Cisco’s networking business, its largest division, saw revenue jump 15% to US$7.8 billion, also beating forecasts.

The company reported US$1.3 billion in AI infrastructure orders from large cloud customers.

Cisco expects Q2 revenue of US$15 billion to US$15.2 billion, above estimates, and forecasts full-year revenue of between US$60.2 billion and US$61 billion.

🔗 Source: CNBC

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Implications, context, and why it matters.

AI orders up, enterprise steady

Cisco booked $1.3 billion in new AI infrastructure orders from hyperscalers (the largest cloud providers). The split was even between Silicon One systems (Cisco’s custom networking chip plus system platform) and optics (high-speed optical transceivers used to connect servers and switches). Management expects at least 2x FY2025 orders from these buyers and about $3 billion in AI infrastructure revenue from hyperscalers in FY2026 1.
Security revenue fell 2% while collaboration dropped 3%, missing estimates, and the move to cloud subscriptions in Splunk (the observability and security software platform Cisco acquired) hurt the timing of revenue recognition 1 2.
Management said a multi-year campus network upgrade is underway due to end-of-support for older Catalyst generations (Cisco’s enterprise switching line). Enterprise product orders rose 4% year over year, on top of mid-teens growth a year ago excluding Splunk. Service provider and cloud orders jumped 45% 1.
Cisco gave product order trends by region with customer type, then reported higher total plus product Remaining Performance Obligations (RPO). It did not share book-to-bill (the ratio of orders received to revenue billed in the period) or RPO by segment, which limits visibility into demand versus revenue timing 1 3.

400G and 800G optics suppliers see a near-term spike

The $1.3 billion AI orders were split evenly between Silicon One systems plus optics, which signals near-term demand for 400G and 800G (400 and 800 gigabits per second) links. Cisco also plans to ship its one millionth Silicon One chip in Q2 of FY2026 1.
The new 8223 router with 51.2 terabits per second capacity, plus a broader NVIDIA partnership around the N9100 switch (a data center network switch platform), point to deployments that will need 400G and 800G optics into the second half of FY2026 1.
Optical makers, specialty distributors for data center transceivers, and systems integrators that validate AI fabrics (the high-speed networks that interconnect AI servers) can ride this wave by lining up with Cisco’s silicon photonics (using silicon to build optical components) plus coherent optics (advanced optical modulation for higher speeds over longer distances) ecosystem 4 5.
1.6T client optics (1.6 terabit-per-second pluggable modules) are set to ramp in 2026, with the market projected to top $15 billion by 2030. Suppliers focused on four-level pulse amplitude modulation (PAM4) digital signal processor (DSP) application-specific integrated circuits (ASICs) plus silicon photonics manufacturing can grab early volume 5.