Cisco Q4 FY26: Record $17.3B and a $73B Guide — The Networking Supercycle Shows Up

Orders +35% and $9.3B of AI infra orders powered a beat, FY27 guide implies ~15% growth, but 25x forward earnings leaves little room for error

Cisco just printed its biggest quarter in 30 years, and guided even bigger

Cisco reported Q4 FY26 revenue of $17.3 billion, up 18% year over year, and non-GAAP EPS of $1.22, up 23%, both records and above the high end of its $16.7 to $16.9 billion and $1.16 to $1.18 guide. For FY26, revenue was a record $63.3 billion, up 12%, with non-GAAP EPS of $4.33, up 14%. Management guided FY27 to $72.2 to $73.4 billion revenue and $5.05 to $5.11 non-GAAP EPS, implying about 15% revenue growth at the midpoint. The driver is broad-based orders, not just AI, with total product orders up 35% in Q4.

What happened in Q4

• Revenue $17.3B +18% YoY, product revenue +24% YoY, both records
• Non-GAAP EPS $1.22 +23% YoY, above guide high of $1.18
• Non-GAAP operating margin 34.8% for FY26, up 40 basis points, with Q4 operating leverage offsetting a 2.1 point gross margin headwind from hardware mix
• Operating cash flow $5.4B in Q4, up 27%, cash and investments $15.9B at quarter end
• Capital return $3.2B in Q4 ($1.7B dividend + $1.5B buyback) and $12.7B in FY26, about 99% of free cash flow, with $8.1B remaining on the buyback and the dividend raised for the 15th straight year

Source: Cisco Q4FY26 Earnings Results call transcript, Aug 12, 2026 (Bargo stored transcript ircall://CSCO/2026-08-12) and Cisco IR quarterly results page.

Guidance: FY27 points to a second year of double digits

• Q1 FY27: revenue $18.0 to $18.2B, non-GAAP gross margin 65% to 66%, non-GAAP operating margin 35.5% to 36.5%, non-GAAP EPS $1.32 to $1.34, tax about 18.5%
• FY27: revenue $72.2 to $73.4B, non-GAAP EPS $5.05 to $5.11
• At the $72.8B midpoint, FY27 implies about 15.0% growth over FY26 $63.3B, with core ex-AI about 10% versus the long-term model of 4% to 6%
• Management said gross margin faces a slight headwind in FY27 from hardware mix in the supercycle, but operating margin near 35% would be a high watermark

Demand: why Cisco calls it a supercycle

Orders tell the story more than revenue. Total product orders were up 35% in Q4, with hyperscale up triple digits and ex-hyperscale up 25%. Enterprise was up 21% with double-digit growth in every category and geography, public sector up 30%, and service provider and cloud up 95% with telco up more than 30%.

• Networking orders up 40%, the 8th straight quarter of double-digit growth. Campus up 20%, Wi-Fi 7 more than 50% of wireless, data center networking up 35%, industrial IoT double-digit for 9 quarters
• AI infrastructure for hyperscalers: $4B orders in Q4, $9.3B in FY26, about 4.5 times FY25. Mix about 60% Silicon One systems and 40% optics. Acacia had more than $1B orders in Q4, shipping 850 400G and 75 800G coherent pluggables. Three new design wins in Q4 for P200 scale-across, G200 scale-out, and a managed optical fiber network. FY27 AI infra revenue guided to $7.5B, up from about 6% of FY26 revenue versus less than 2% in FY25
• NeoCloud, sovereign and enterprise AI orders more than $400M in Q4 and more than $1B in FY26. Nexus switches tagged for AI up 85% sequentially
• Security: entire portfolio including Splunk grew orders double digits, firewalls up 30% for a second quarter, 1,500 new customers for Secure Access, XDR, Hypershield and AI Defense in Q4 (6,400 since launch). Splunk added 280 new logos in Q4, more than 1,000 for the year. Collaboration had its best quarter in 7 years, video devices up 40%

The breadth matters. This is not only hyperscale AI. Campus refresh tied to Catalyst 4000 and 6000 end-of-sale, telco scale-across where traffic is 14 times legacy data center interconnect, and early quantum and post-quantum cryptography prep all contribute. That is why management described the supercycle as early.

For context on how the broader AI buildout is funding this demand, see The Supply Side Voted With Its Wallet: ~$90B of New Chip Capex in One Week and The Shortage Is Spreading Sideways: CPUs, Tools, Even People. On hyperscaler backlog dynamics, see CoreWeave Q2: $104B Backlog, $25B More in Early Q3.

Financials and valuation: growth has re-accelerated, multiple has too

• Trajectory: Q1 FY26 +7.5% YoY, Q2 +9.7%, Q3 +12.0% to $15.84B, Q4 +18% to $17.3B. The beat versus the $16.9B guide high was about 2.4%
• Profitability: Q3 gross margin 63.6% and operating margin 25.0% on a GAAP basis, FY26 non-GAAP operating margin 34.8%. Q4 showed operating leverage, with opex down 3.7 points of revenue offsetting gross pressure
• Balance sheet: total debt $22.9B versus cash $7.1B, net debt $15.8B, equity $48.9B, invested capital about $64.6B. ROIC about 19.4% on annualized Q3 operating income, a high-quality return for a hardware and software mix
• Valuation as of Aug 12: market cap about $475B, trailing P/E 40.8x, forward P/E 25.1x, PEG 1.21, price to sales 7.8x, EV to EBITDA 28.9x
• Street: consensus Buy (1.85 on a 5-point scale), 22 analysts, mean price target $132.59 (low $115, high $150), about 7.0% above the $123.88 close on Aug 12

A 25 times forward multiple prices sustained double-digit growth. That is reasonable if FY27 delivers 15% and AI infra scales to $7.5B, but it leaves little cushion if hyperscaler orders lump or mix pressures gross margin more than expected.

Flow and technicals: confirmation, not the thesis

• Price: $123.88 close Aug 12, day high $124.45, low $122.26, VWAP $123.53, volume 33.4M into the print. RSI 63.0, neutral, not overbought after the pop
• Algo distribution: distribution score 9.4 on Aug 12, very low, versus 28.2 on Aug 11 and a watch flag of 67.3 on July 29. No institutional distribution pressure into earnings
• Options: volume 171k versus 39k 30-day average, about 4.4 times normal, flagged unusual. Put-to-call volume 0.54, call-heavy, open interest put-to-call 0.73. Positioning is long gamma with net GEX about +850k, gamma flip at 123.85, call wall at 125 and put wall at 120, which tends to pin price near spot and makes 125 near-term resistance. ATM implied volatility 3.13% is very low

Risks and overhangs

• Valuation risk if the supercycle fades or hyperscaler capex pauses. FY27 guide already assumes hardware mix weighs on gross margin
• Concentration in hyperscale AI infra, where orders are lumpy and competition from Arista and optics vendors is intense
• Execution on Silicon One and Acacia optics ramp and on the Splunk cloud transition. Security revenue was up 14% in Q4 despite 30% firewall order growth, showing timing effects
• Near-term noise from an actively exploited firewall flaw CVE-2026-20349, for which Cisco issued hot fixes on Aug 12

What to watch

• Q1 FY27 revenue versus the $18.0 to $18.2B guide and whether AI infra revenue tracks toward $7.5B
• Order growth ex-hyperscale staying above 20% and networking orders staying double-digit
• Gross margin holding 65% to 66% in Q1 and operating margin expanding toward 35% for the year
• Splunk and security revenue re-accelerating to high single digits in FY27 from low single digits in FY26

Sources: Cisco Q4FY26 Earnings Results transcript Aug 12, 2026 (Bargo ircall://CSCO/2026-08-12); Cisco IR quarterly results page; SEC 8-K filed 2026-08-12 20:07 UTC; Bargo market data as of Aug 12-13, 2026 (quote, fundamentals, analyst ratings, technicals, options positioning and flow).