{"id":455082,"date":"2026-05-18T15:43:17","date_gmt":"2026-05-18T15:43:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/455082\/"},"modified":"2026-05-18T15:43:17","modified_gmt":"2026-05-18T15:43:17","slug":"buy-cisco-as-a-new-leader-of-the-ai-networking-infrastructure-space-may-18-2026","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/455082\/","title":{"rendered":"Buy Cisco as a New Leader of the AI Networking Infrastructure Space – May 18, 2026"},"content":{"rendered":"

Key Takeaways Cisco posted record networking revenue growth as AI-driven demand boosted switching and routing orders.CSCO generated $5.3B in AI infrastructure orders year to date, surpassing its fiscal 2026 target.CSCO raised fiscal 2026 guidance and is reallocating resources toward AI, security, silicon and optics. <\/p>\n

Cisco Systems Inc. (CSCO Quick QuoteCSCO<\/a> – Free Report<\/a>) has been benefiting from strong product orders from hyperscalers, enterprises, service providers, the public sector and cloud customers. The company reported blowout third-quarter fiscal 2026 earnings results.\u00a0<\/p>\n

CSCO generated record-high revenues primarily due to its networking portfolio, powered by Silicon One, AI-native security solutions and operating systems. Increasing AI workloads at the network edge and the emergence of physical AI are benefiting the industrial IoT portfolio. Consequently, the stock price jumped.<\/p>\n

\"Zacks
Image Source: Zacks Investment Research<\/p>\n

CSCO Rides on AI Networking Strength<\/p>\n

Networking revenues were $8.82 million, up 25% year over year, highlighting accelerating demand for the company\u2019s switching and routing portfolio. That strength aligned with management\u2019s view that customers are modernizing networks to handle AI-driven traffic growth and campus refresh cycles.\u00a0<\/p>\n

Cisco pointed to record campus networking orders growing more than 25% year over year and data center switching orders up more than 40%, supported by strong uptake in wireless and campus switching.<\/p>\n

Solid Demand From AI Hyperscalers\u00a0<\/p>\n

In the last reported quarter, Cisco generated $1.9 billion in AI infrastructure orders, resulting in a total of $5.3 billion in orders year to date. This figure already exceeds management\u2019s fiscal 2026 target. In the last quarter, five of the top hyperscalers each grew orders at triple-digit rates year over year.<\/p>\n

CSCO expects total AI infrastructure orders to reach $9 billion in fiscal 2026, an increase of 4.5X from fiscal 2025. Overall product orders grew by a sizable 35% year over year in the third quarter. Of this, data center switching orders grew 40% from the year-ago period, supported by massive AI-powered data center buildout.\u00a0<\/p>\n

Cisco also highlighted a balanced mix between Silicon One-based networking systems and optics, alongside multiple hyperscaler design wins during the quarter. CSCO\u2019s Acacia optics business, which makes the high-speed coherent pluggable optics for AI data centers, generated $1 billion in orders in the last reported quarter.<\/p>\n

Moreover, CSCO noted progress in refreshed security products and highlighted that over 1,000 new customers purchased products such as Secure Access, XDR, Hypershield and AI Defense in the third quarter.<\/p>\n

AI hyperscaler behemoths like Amazon.com Inc. (AMZN Quick QuoteAMZN<\/a> – Free Report<\/a>) , Microsoft Corp. (MSFT Quick QuoteMSFT<\/a> – Free Report<\/a>) , Meta Platforms Inc. (META Quick QuoteMETA<\/a> – Free Report<\/a>) and Alphabet Inc. (GOOGL Quick QuoteGOOGL<\/a> – Free Report<\/a>) are using CSCO\u2019s AI-enabled networking infrastructure and switching equipment for their data centers.\u00a0<\/p>\n

Targeted Reallocation of Resources<\/p>\n

Cisco has decided to retrench 4,000 manpower as part of a sweeping restructuring effort. Management said that this restructuring has been guided to give more emphasis to areas like AI networking infrastructure, network security, silicon and optics.\u00a0<\/p>\n

CSCO identified these four areas as its core business model in which management believes the company can maximize its long-term value. CEO Chuck Robbins said that the company is transforming itself from a legacy networking bigwig to a critical operator of the AI-powered networking infrastructure space.\u00a0<\/p>\n

Strong Guidance<\/p>\n

For the fourth quarter of fiscal 2026, CSCO expects revenues of $16.7 billion to $16.9 billion and non-GAAP earnings of $1.16 to $1.18 per share. For fiscal 2026, management raised its outlook to revenues of $62.8 billion to $63.0 billion and non-GAAP earnings of $4.27 to $4.29 per share.\u00a0<\/p>\n

Management also announced that the restructuring plan will cost up to $1 billion of pretax charges, including roughly $450 million in the fourth quarter of fiscal 2026, with the remainder in fiscal 2027.<\/p>\n

Impressive Estimate Revisions<\/p>\n

For fourth-quarter fiscal 2026 (ending July 2026), the Zacks Consensus Estimate currently shows revenues of $16.84 billion, suggesting an improvement of 14.8% year over year and earnings per share of $1.09, indicating an increase of 10.1% year over year. The Zacks Consensus Estimate for the current year has improved 0.9% in the last seven days.<\/p>\n

For 2027 (ending July 2027), the Zacks Consensus Estimate currently shows revenues of $65.77 billion, suggesting an improvement of 5.7% year over year and earnings per share of $4.52, indicating an increase of 8% year over year. The Zacks Consensus Estimate for next year has improved 0.7% in the last seven days.<\/p>\n

\"Zacks
Image Source: Zacks Investment Research<\/p>\n

Investment Thesis<\/p>\n

Cisco Systems currently carries a Zacks Rank #2 (Buy). You can see the complete list of today\u2019s Zacks #1 Rank (Strong Buy) stocks here<\/a>. CSCO offers an opportunity to invest in a company with substantial unrealized potential in the AI revolution.\u00a0<\/p>\n

The astonishing growth potential of the global AI-powered data centers and management\u2019s business visibility offer near-term potential. As a result, the average target price of brokerage firms is expected to witness solid near-term upside.<\/p>\n

\"Zacks
Image Source: Zacks Investment Research<\/p>\n","protected":false},"excerpt":{"rendered":"Key Takeaways Cisco posted record networking revenue growth as AI-driven demand boosted switching and routing orders.CSCO generated $5.3B…\n","protected":false},"author":2,"featured_media":455083,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,2419,3149,61,1831,975,13043,60,13045,13046,13044,13047,696,4755,2234,13048,131,80],"class_list":["post-455082","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-financial","tag-financial-planning","tag-ie","tag-investing","tag-investment","tag-investment-advice","tag-ireland","tag-online-investment","tag-online-stock-trading","tag-online-trading","tag-quote","tag-quotes","tag-stock","tag-stock-market","tag-stock-quotes","tag-stocks","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/455082","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=455082"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/455082\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/455083"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=455082"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=455082"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=455082"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}