Cisco just dropped over 10% in after-hours trading. That’s after it actually beat estimates. The problem? Its outlook didn’t impress anyone. Wall Street doesn’t care if your last quarter was decent. If your next one looks soft, the stock tanks. That’s what happened here.
The company posted $1.04 in adjusted earnings per share, better than the $1.02 forecast. Revenue was $15.35 billion, also higher than the $15.12 billion expected. Sales rose 10% from the $14 billion they reported this time last year.
Cisco’s net income went up too. It hit $3.18 billion, or 80 cents a share, compared to $2.43 billion, or 61 cents, a year ago.
And yes, that’s all after excluding stock-based compensation. But none of that helped once they opened their mouths about what’s next.
Cisco’s weak guidance and slow AI rollout caused the drop
For the current quarter, Cisco said it expects adjusted earnings between $1.02 and $1.04 a share. It also guided revenue to land somewhere between $15.4 billion and $15.6 billion. Analysts had already priced in $1.03 a share and $15.18 billion in revenue.
So while the numbers weren’t awful, they also weren’t exciting. In 2026, matching expectations just isn’t good enough.
Everyone’s watching for companies that will lead in AI. And even though Cisco reported $2.1 billion in orders for AI infrastructure from big cloud players, investors wanted more. That’s why they panicked.
Chuck Robbins, the CEO, tried to calm nerves by pointing to future wins. He said Cisco is working with Advanced Micro Devices on an AI infrastructure project in Saudi Arabia, and launched a new switch that has an Nvidia chip inside.
Chuck didn’t sound too urgent though. “On the sovereign side, there’s really no real need nor expectation for meaningful impact in FY26,” he told analysts. “And so we don’t need that to actually accelerate for the guide that we’ve provided. It’s purely upside.” Not exactly the kind of thing that lights up a stock.
He also said the smaller cloud players, the so-called neoclouds, should start bringing in money in the second half of the current fiscal year. But the bigger bump is expected in 2027. That feels far away to investors trying to ride the AI wave right now.
Meanwhile, Chuck pointed out that rising memory prices, caused by hot demand for Nvidia’s graphics chips, are making it harder for hardware firms. So Cisco is raising prices and tweaking contracts with partners.
“Do I think customers will try to buy ahead in some cases? Perhaps,” he said. “But I don’t think it’s going to be a big trend in the networking side of our business.”
Looking at the year ahead, Cisco is targeting $4.13 to $4.17 in adjusted earnings per share and $61.2 billion to $61.7 billion in revenue. That would be about 8.5% growth. Wall Street had expected $4.12 a share and $60.74 billion in sales. So it’s a slight beat, but again, nothing explosive. And that’s why the stock got punished. No spark, no rally.
