Cisco Drops 9% Despite Earnings Beat, 'Conservative' Outlook
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- Cisco shares fell 9% Thursday despite Q4 revenue jumping 18% to $17.3 billion, beating the $16.8 billion consensus estimate from LSEG
- Cisco guided next-quarter revenue of $18 billion to $18.2 billion, well above the $16.8 billion Street consensus, yet Piper Sandler said the outlook "looks conservative given the current demand environment"
- Piper Sandler analysts, who rate the stock a hold, warned that some investors "may start to nitpick that we're seeing peak growth" after Cisco shares had rallied more than 60% year-to-date on AI tailwinds
- CEO Chuck Robbins acknowledged the criticism on CNBC, telling Jim Cramer the company is "starting the year being a little bit prudent" despite operating in "incredible markets"
- Hyperscaler customers placed $4 billion in infrastructure orders during Q4 — a fiscal-year total of $9.3 billion — with Cisco projecting that segment's revenue to nearly double to $7.5 billion in fiscal 2027
- KeyBanc Capital Markets maintained a buy-equivalent rating, citing expected market-share gains as hyperscalers, neoclouds, and others ramp AI-related capital expenditures
- Analysts forecast Cisco's sales growth will dip back into the single digits next fiscal year, even as the company projects roughly 15% revenue growth for the current year
Why it matters: Cisco beat on both revenue and guidance, yet the stock fell 9% — the disconnect reflects investor anxiety that after a 60%-plus year-to-date rally, growth may be peaking, with analysts already modeling a return to single-digit revenue growth in fiscal 2026. Even KeyBanc's bullish call hinges on Cisco capturing a share of the $9.3 billion in hyperscaler orders already booked this year, a bar the "conservative" guidance does little to elevate.
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