Cisco revenue: Soaring as AI fundamentals accelerate

Cisco Morningstar Key Metrics

• : $90
• :★★

• Morningstar Economic Moat Rating

  : wide

• Morningstar Uncertainty Rating

  : Medium

What we thought about Cisco’s earnings

Cisco CSCO Systems’ April quarter results beat expectations, with revenue up 12% year-over-year to $15.8 billion. Cisco has raised its 2026 outlook on strong growth in AI revenue ($3 billion to $4 billion) and AI order book ($5 billion to $9 billion) goals.

Why it’s important: Cisco’s growth in artificial intelligence has been impressive, benefiting from a large amount of available sources and a strong portfolio between traditional networking and optics. We believe we are well-positioned not only in hyperscale clouds and AI model builders, but also in sovereign AI buildouts and neoclouds.

• Networking is both a key enabler and bottleneck of AI model performance. This leads to high spending on AI network infrastructure to support the growth of Cisco and its competitors. This trend is expected to continue strongly over the next five years.
• Campus and enterprise networking remains Cisco’s largest business, with strong customer refresh cycles driving above-trend growth in the short term. Still, over the next five years, the rapid growth of AI will likely narrow the gap with campuses in terms of composition.

Conclusion: We raise our fair value estimate for Widemote Cisco from $75 to $90 due to projected campus and AI revenue growth over the next five years. The stock soared 20% after-hours after the AI ​​guidance hike, and we believe it remains overvalued.

• We model far beyond Cisco’s AI guidance. As a conservative guide, Cisco’s AI guidance has increased every quarter this year. We model $8 billion in 2027 (management’s guide is $6 billion). By the end of the decade, it had increased to $19 billion, implying 79% annual growth from FY25.
• We model double-digit growth in campus and enterprise networking in 2026 and 2027, and predict a decline to mid-single-digit growth by 2030. This is significantly higher than historical growth in the 5% range, which we attribute to a strong continuous renewal cycle that extends into 2027.