Cisco Posts Record $18.5 Billion Quarter as AI Networking Demand Surges

Cisco has delivered the biggest quarter in its history. The networking giant reported revenue of $18.5 billion for the first quarter of its 2027 financial year, up 24% on a year earlier — its fastest growth in more than 15 years — as cloud providers and enterprises raced to build out infrastructure for artificial intelligence.

The results, released after the market closed on Thursday, November 12, beat Wall Street expectations on both the top and bottom lines. Adjusted earnings per share came in at $1.40, up 40% year over year and ahead of the $1.33 analysts had forecast. Revenue of $18.52 billion also topped the roughly $18.1 billion consensus estimate.

Chief executive Chuck Robbins said organisations are upgrading their networks to run autonomous and agentic AI workloads, and that demand is now showing up across Cisco's business rather than in a single product line.

Networking sales jump 43% as AI build-out accelerates

The engine of the quarter was Cisco's networking business, its largest product line. Networking revenue surged 43% to $11.13 billion, accounting for about 60% of total quarterly sales. Cisco said the growth was led by triple-digit growth in AI infrastructure and double-digit growth in data centre switching.

Total product revenue rose 32% to $14.7 billion, while services revenue edged up 1% to $3.9 billion. Among the smaller product lines, security grew 7%, collaboration rose 8% and observability increased 2%.

Profitability improved sharply. GAAP net income rose 59% to $4.55 billion, or $1.14 per share, up 58%. Non-GAAP operating margin expanded to a record 37.8%, even as non-GAAP gross margin narrowed to 65.6%. Total annual recurring revenue ended the quarter at $32.7 billion.

Cisco now expects $9 billion of hyperscaler AI revenue

The most closely watched number in the report was not in the quarter itself but in the outlook. Cisco raised its expectation for AI infrastructure revenue from hyperscale cloud customers to $9 billion in fiscal 2027 — more than double the roughly $4 billion it recorded in fiscal 2026, and up from its previous $7.5 billion target.

Hyperscalers are now expected to account for about 12% of Cisco's total revenue this year, compared with 6% last year. The company said it has won 18 AI infrastructure design deals over the past five quarters, and data centre switching orders have grown by double digits in nine of the past eleven quarters.

The AI figure is a management forecast for one customer group, not booked revenue, and it depends on hyperscalers following through on their spending plans. But the size of the upgrade — and the fact that Cisco raised it only three months after setting the earlier target — underlines how quickly the largest cloud operators are ordering networking gear for AI data centres.

Full-year guidance raised sharply

Cisco lifted its fiscal 2027 revenue guidance to between $74.8 billion and $75.8 billion, up from the $72.2 billion to $73.4 billion range it gave three months ago, and ahead of the roughly $73 billion analysts had expected. Adjusted earnings per share are now forecast at $5.47 to $5.53 for the year, up from $5.05 to $5.11 previously.

For the current quarter, the second of fiscal 2027, Cisco expects revenue of $18 billion to $18.2 billion and adjusted earnings of $1.34 to $1.36 per share — a step down from the record quarter just reported, which the company had flagged as an unusually strong period.

Growth was broad-based geographically. Revenue in the Americas rose 28% to $11.5 billion, and every region grew by double digits, according to the company's results.

Shares fall despite the beat

Despite the record numbers and the raised outlook, Cisco shares fell more than 6% on Friday, November 13. The drop came as part of a wider slide in AI-linked stocks, with investors questioning how quickly the huge spending on AI infrastructure will translate into returns for the companies building it.

That tension runs through the whole AI trade at the moment: the orders are real and growing fast, but so are the questions about who pays for them and when they pay off. Cisco's quarter shows the demand side of that story in unusually clear numbers. The market's reaction shows the other side.

Why this quarter matters

Cisco is one of the clearest bellwethers for enterprise technology spending. When its revenue grows 24% — the fastest in a decade and a half — it usually means companies are not just talking about AI, they are rewiring their networks for it. The 43% jump in networking sales and the doubled hyperscaler AI target suggest the build-out is still accelerating rather than slowing down.

The question for the rest of fiscal 2027 is whether that pace can hold. Cisco's own guidance implies a strong year, but the second-quarter forecast is already lower than the first, and the company has warned that delivery of the hyperscaler AI revenue depends on customer deployment timing. For now, though, the world's largest networking company has put up the strongest quarter in its history.

Sources

• Zacks — Cisco's Q1 Earnings Beat Estimates, Strong Networking Aids Revenues
• The Motley Fool — Cisco (CSCO) Q1 2027 Earnings Call Transcript
• Converge Digest — Cisco: The AI-Driven AI SuperCycle