Cisco Systems projected fiscal 2027 revenue and profit exceeding Wall Street estimates, anticipating that the increasing demand for networking equipment and artificial intelligence infrastructure will support growth into the upcoming year. However, the company’s stock experienced a decline exceeding 9% during early U.S. trading on Thursday, as analysts observed that the returns, although strong, were confronted with exceptionally high Wall Street expectations. Cisco’s stock has surged by more than 60% so far this year, reflecting the benefit from runaway demand for the gear needed to underpin cutting-edge AI systems. “FY27 outlook implies core business growth of 10% which is impressive, but there was a high bar for results as valuation was extended heading into earnings and FQ4 AI results were largely in-line with expectations,” analysts said in a note.

They added that the outlook “implies lower product gross margin, which we think may be due to AI dilution.” Nonetheless, the guidance highlighted the robust demand from hyperscale customers, which has contributed to the momentum of its core networking business. Cisco anticipates first-quarter adjusted earnings ranging from $1.32 to $1.34 per share, surpassing analysts’ average estimate of $1.14. Additionally, revenue is projected to be between $18 billion and $18.2 billion, exceeding the consensus of $16.66 billion. For fiscal 2027, Cisco anticipates adjusted earnings ranging from $5.05 to $5.11 per share and revenue between $72.2 billion and $73.4 billion, both significantly surpassing analysts’ projections of $4.28 and $62.91 billion, respectively.

Adjusted fourth-quarter earnings reached $1.22 per share, surpassing estimates of $1.17. Revenue increased by 18% year-over-year to $17.3 billion, exceeding the consensus of $16.82 billion. Cisco reported that total product orders increased by 35% year over year during the quarter, with networking product orders surging by 40%. This marks the eighth consecutive quarter of double-digit growth. Product revenue experienced a 24% increase, primarily driven by a 28% growth in networking revenue. Demand for AI infrastructure from hyperscale customers has also seen a notable acceleration. Cisco recorded $4 billion in AI infrastructure orders during the fourth quarter, bringing total orders for fiscal 2026 to $9.3 billion.

The company generated approximately $4 billion in AI infrastructure revenue in fiscal 2026 and anticipates that this figure will rise to $7.5 billion in fiscal 2027. For the complete fiscal year 2026, revenue experienced a 12% increase, reaching $63.3 billion, while unadjusted net income saw a 30% rise, totalling $13.3 billion. Cisco also returned $3.2 billion to shareholders thru dividends and share repurchases during the quarter and declared a quarterly dividend of $0.42 per share.