Cisco F3Q26 Review: Hitting Both AI and Non-AI with (Silicon) One Stone; Revenue and Orders Drive Estimates Higher Despite GM Pressures

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Cisco F3Q26 Review: Hitting Both AI and Non-AI with (Silicon) One Stone; Revenue and Orders Drive Estimates Higher Despite GM Pressures

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in order growth rate stemmed from price increases, the underlying improvement akanksh.chauhan@jpmorgan.com

in order run-rates was pleasantly surprising. The acceleration in orders from J.P. Morgan Securities LLC

customers prioritizing network upgrades was also reflected in the acceleration of

Enterprise orders, which were up 18% y/y in F3Q vs. 8% y/y in F2Q and 4% y/y Quarterly Forecasts (FYE Jul)

in F1Q, as well as double-digit growth in campus switching along with Enterprise Adj. EPS ($)

routing and wireless access points. More importantly, with Enterprise companies 2025A 2026E 2027E

likely to accelerate their refreshes of IT infrastructure across data center and Q1 0.91 1.00A 1.16

Q2 0.94 1.04A 1.18

campus further on account of implications from recent AI model developments Q3 0.96 1.06A 1.19

(such as Mythos), concerns relative to the pull-forward of demand will be Q4 0.99 1.17 1.23

overwhelmed by the runway for growth, with less than 10% of the campus install FY 3.80 4.27 4.75

base refreshed with the updated portfolio of campus switches. With regards to AI,

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the company announced 5 new wins with hyperscalers in relation to optics and

systems, including 2 scale-across wins for the recently launched P200 products,

which are expected to start to flow into the hyperscaler AI order acceleration

implied for F4Q (implied outlook for $3.7 bn+ vs. $1.9 bn in F3Q). While the

supply availability is helping the company raise the FY26 hyperscaler AI revenue

expectation to $4 bn (vs. $3 bn prior), the robust demand backdrop is also helping

the company provide visibility into realizing at least $6 bn of AI hyperscaler