Cisco reports record results from AI supercycle, stock pulls back

Cisco just delivered the best quarter in the company’s history, and the stock went down. Welcome to 2026, where record-breaking numbers apparently aren’t enough to keep momentum going once the initial euphoria fades.

The networking giant posted $15.8 billion in revenue for fiscal Q3 2026, a 12% jump from the same period last year and comfortably ahead of the $15.56 billion Wall Street had penciled in. Non-GAAP earnings per share came in at $1.06, also beating estimates. Shares initially surged as much as 15% on the news, then proceeded to give back roughly 7% from those highs, settling around $120 in mid-August.

The AI machine driving record numbers

Through the first three quarters of fiscal 2026, Cisco has booked $5.3 billion in AI-related orders. That’s enough to prompt the company to nearly double its full-year AI orders target from $5 billion to $9 billion. AI revenue guidance also got a meaningful bump, rising from $3 billion to $4 billion for fiscal 2026.

CEO Chuck Robbins called the current moment a “networking supercycle,” pointing to hyperscale customers racing to build out AI infrastructure as the primary catalyst. Robbins also offered a longer-term forecast, suggesting AI traffic growth expectations could increase by up to nine times over the next decade.

Why the stock pulled back anyway

The initial 13-15% post-earnings pop priced in a lot of the good news instantly. Broader market volatility around AI-focused stocks has also created a skittish environment where even strong performers can’t hold their gains.

Cisco also announced plans for thousands of job cuts, redirecting resources toward silicon development and AI infrastructure. The company’s traditional enterprise networking business has grown unevenly in recent years, which makes the pivot toward AI less of a luxury and more of a necessity.

What the guidance says about Q4

Cisco guided for Q4 fiscal 2026 revenue of $16.7 billion to $16.9 billion, which would represent another sequential step up from the $15.8 billion it just reported. Non-GAAP EPS guidance of $1.16 to $1.18 implies meaningful profit growth as well.

The Q4 earnings call is scheduled for August 12, 2026. Investors will be looking for confirmation that the AI orders pipeline is converting into actual revenue at the pace Cisco is projecting, and whether the restructuring is creating the operational efficiencies management has promised.

The gap between $9 billion in AI orders and $4 billion in AI revenue is worth noting. Orders represent commitments from customers, but revenue recognition depends on delivery timelines and contract structures. That $5 billion spread between orders and recognized revenue suggests a substantial backlog that could fuel growth well into fiscal 2027.

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