Key Takeaways:
- Cisco reported record Q3 revenue of $15.8 billion, up 12% year-over-year
- AI infrastructure orders from hyperscalers reached $1.9 billion in the quarter
- The company raised its full-year AI order target to approximately $9 billion
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Cisco posts record $15.8B revenue as AI networking orders surge 35%
Cisco Systems reported record Q3 revenue of $15.8 billion, up 12% year-over-year, as AI-driven demand for networking infrastructure translated into the company's fastest top-line growth in years.
"We took approximately $300 million in AI infrastructure orders from neocloud, sovereign and enterprise customers in Q3," Chief Executive Officer Chuck Robbins said on the earnings call.
Product orders surged 35% year-over-year, with networking segment revenue climbing 25%. AI infrastructure orders from hyperscalers reached $1.9 billion in the quarter. Campus networking also hit record orders, up 25% year-over-year, as enterprises modernize networks ahead of AI-driven traffic growth. Operating margins recovered to 24% on a trailing basis after troughing at 22% in fiscal 2025, with Chief Financial Officer Mark Patterson noting that operating expenses fell more than 2% as a percentage of revenue year-over-year.
The results confirm that AI infrastructure spending is expanding beyond GPU hardware into networking equipment, a shift that benefits Cisco's Silicon One chips and Acacia coherent optic technology. The company raised its full-year AI hyperscaler order target to approximately $9 billion, up from an earlier $5 billion expectation, citing triple-digit order growth from five of the largest hyperscalers in Q3. Gross margins stabilized near 64%, providing the ceiling the operating leverage thesis requires.
The security segment, which includes the Splunk data observability platform acquired in fiscal 2024, remained a near-term drag as Splunk customers shifted from on-premise licenses to cloud subscriptions, a mix headwind Patterson called transitory, with compares expected to normalize in the first half of fiscal 2027.
Cisco guided Q4 revenue of $16.7 billion to $16.9 billion, implying roughly 14% year-over-year growth at the midpoint. The guidance raise signals management expects AI demand to accelerate. Investors will watch the Q4 earnings call for updated segment margins and the pace of Splunk's subscription transition.
This article is for informational purposes only and does not constitute investment advice.
