UPDATED 20:35 EDT / AUGUST 13 2025

INFRA

AI infrastructure deals fuel strong earnings for Cisco

Strong artificial intelligence infrastructure orders carried Cisco Systems Inc. to fiscal fourth-quarter revenues and earnings that beat analysts’ estimates and marked a strong finish to the fiscal year.

Quarterly revenue of $14.7 billion was up 8% from $13.64 billion last year and ahead of analyst estimates of $14.62 billion. Net income of $4 billion, or 99 cents per share, narrowly beat expectations of 98 cents.

“AI infrastructure orders we received from webscale customers in fiscal 2025 were more than double our original target, indicating a massive opportunity ahead,” said Chief Executive Officer Chuck Robbins (pictured). Cisco said AI infrastructure orders totaled more than $800 million in the quarter, up from $600 million the previous quarter, and totaled $2 billion for fiscal 2025.

Despite the strong results, Cisco stock drifted about a half percentage point lower in after-hours trading.

Security strength

On a product line basis, networking revenues grew 12%, security products 9%, observability 4% and collaboration 2%. The single-digit growth in security overall masked the strong performance of new product lines and Splunk, which Cisco acquired last year. Splunk revenues grew 14% in the quarter but overall performance was dragged down by legacy products, Robbins said.

Zeus Kerravala, principal analyst at ZK Research, agreed that the security business is fundamentally strong. “While the percentage growth in security seemed low on the surface, it is growing where it needs to,” he said. “New product growth was over 20%. If one pulls out U.S. Federal, which is very slow, the rest of the business saw double-digit growth.”

Total gross margin of 68.4% was up from 67.9%, and year ago, indicating that Cisco is expanding into new markets without sacrificing profits.

The company returned $2.9 billion in capital to shareholders through share repurchases and dividends in the quarter, bringing total lreturns in fiscal 2025 to $12.4 billion and surpassing the $12.1 billion returned a year ago. Operating expenses were $5.0 billion, up 4%, comprising 34.1% of revenue.

Cisco issued guidance in line with analysts’ estimates. For the first quarter of fiscal 2026, it estimates revenue of between $14.65 billion and $14.85 billion, slightly ahead of consensus estimates of $14.62 billion. Earnings-per-share of between $0.97 and $0.99 were in line with expectations.

The company foresees full-year earnings per share of between $4 and 4.06 compared to a consensus estimate of $4.02. For the year, Cisco expects revenue to come in at between $59 billion and $60 billion versus a consensus estimate of $59.39 billion.

AI tailwind

Robbins said AI is providing a tailwind that is benefiting the company across the board.

“As we move into the next phase of AI, with agents autonomously conducting tasks alongside humans, the capacity requirements of the network will be compounded to accommodate both unprecedented levels of network traffic and an increasing threat landscape,” he said. He said Cisco internal research found that 97% of IT networking executives believe they’ll need to upgrade their networks to successfully deploy AI.

The cloud business continues to show healthy growth, up 49% year-over-year, with “triple-digit order growth in webscale for the fourth consecutive quarter,” Robbins said. He said interest is particularly strong in the new family of Catalyst 9000 switches and refreshed lineup of secure routers, wireless access points, and industrial devices, which are built for the AI inference.

“High-performance networking is an area where Cisco has struggled historically, but with the maturity of Silicon One and its partnership with Nvidia, Cisco has turned this business around,” Kerravala said.

Silicon One is the proprietary chip architecture Cisco introduced six years ago and which is now used throughout its product lines. The company also has a long-term partnership with Nvidia Corp. to build AI-ready data center networks.

“As a trusted partner for enterprises, hyperscalers, neocloud and sovereign cloud providers  alike, Cisco has the opportunity to lead this generational transition in networking and security” brought about by AI, Robbins said.

Executives said the impact of tariffs on the business has been minimal and even provided a sales boost. “We see solid demand signals continuing into FY26 as countries around the world are committing to U.S. domestic investments as part of their trade agreements,” Robbins said.

“While Cisco did guide up, there is still uncertainty around the tariffs,” Kerravala said. “New [Chief Financial Officer] Mark Patterson explained the complexities of not really knowing what lies ahead and the assumptions used.”

Photo: Cisco/livestream

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