Cisco secured partnerships for AI-optimized networking and power-delivery infrastructure in hyperscaler and neocloud deployments.
Cisco Systems' networking business is emerging as one of its strongest growth engines, supported by accelerating AI infrastructure investments, enterprise network modernization and rising bandwidth requirements. Management believes the industry is entering a "networking super cycle," driven by hyperscaler AI deployments, enterprise AI adoption, sovereign cloud investments and public-sector infrastructure upgrades. As AI workloads become more distributed and bandwidth-intensive, networking is becoming the foundation of AI infrastructure rather than just a connectivity layer.
In third-quarter fiscal 2026, networking product orders jumped more than 50% year over year, marking the seventh consecutive quarter of double-digit growth. Product revenues from networking increased 25%, driven by AI infrastructure, campus refresh projects, data center switching, wireless and service-provider routing.
Campus networking orders climbed more than 25%, while data center switching orders rose more than 40%, reflecting growing enterprise investments to prepare networks for AI-driven traffic growth. Cisco expects a multi-year, multi-billion-dollar campus refresh cycle as enterprises replace aging infrastructure with AI-ready networking platforms.
The company is strengthening its competitive position through differentiated technologies. Silicon One has become a strategic advantage, enabling Cisco to provide custom silicon, systems and software tailored to hyperscaler requirements while reducing dependence on merchant silicon. Management noted that Silicon One is central to its AI networking strategy, with new hyperscaler design wins across scale-up and scale-out AI deployments. Acacia optics continues to benefit from the rapid expansion of AI clusters, generating more than $1 billion in quarterly orders as demand for coherent optical interconnects accelerates.
For fiscal 2026, Cisco raised its revenue outlook to $62.8 billion to $63 billion, with non-GAAP earnings of $4.27–$4.29 per share. The company announced a restructuring plan to reallocate resources toward silicon, optics, security and AI, expecting up to $1 billion in pretax charges, including roughly $450 million in the fourth quarter of fiscal 2026, with the remainder in fiscal 2027. Management expects AI infrastructure orders from hyperscalers to reach $9 billion in fiscal 2026, while growing enterprise, sovereign cloud and neocloud deployments should provide additional long-term growth.
Cisco faces stiff competition from Arista Networks and Hewlett Packard Enterprise. Arista is a leader in high-speed Ethernet switching, particularly 100G, and is benefiting from rising demand for 800G and faster networking, driven by large data center expansions supporting distributed computing and cloud infrastructure. Hewlett Packard Enterprise focuses on AI, industrial IoT and distributed computing as key drivers of future infrastructure demand. The acquisition of Juniper Networks has strengthened HPE's position in networking, expanding its capabilities across AI, cloud and hybrid environments.
Cisco shares have appreciated 46.3% year to date, outperforming the broader Zacks Computer and Technology sector's rise of 14.6%. The stock trades at a forward 12-month price-to-earnings of 23.77X compared with the sector's 22.73X. The Zacks Consensus Estimate for fiscal 2026 earnings is $4.28 per share, up 2.6% over the past 30 days, suggesting 12.3% growth from the fiscal 2025 reported figure. Cisco currently holds a Zacks Rank #1 (Strong Buy).