Cisco shares fall over 4% after earnings despite record AI demand

Cisco shares fell more than 4% in after hours trading Wednesday despite the networking giant reporting better than expected fourth quarter earnings and record demand for its AI infrastructure.

Revenue rose 18% from a year earlier to $17.3 billion, above Wall Street expectations of roughly $16.8 billion. Adjusted earnings came in at $1.22 per share, compared with expectations of $1.17.

Cisco said total product orders jumped 35% year over year, while networking product orders increased 40%. The company received $4 billion in AI infrastructure orders from hyperscalers during the quarter, bringing its fiscal 2026 total to $9.3 billion.

The company generated approximately $4 billion in AI infrastructure revenue during fiscal 2026 and expects that figure to reach $7.5 billion in fiscal 2027.

Cisco also issued stronger than expected guidance.

The company expects first quarter revenue between $18 billion and $18.2 billion, with adjusted earnings of $1.32 to $1.34 per share. For fiscal 2027, Cisco expects revenue between $72.2 billion and $73.4 billion and adjusted earnings between $5.05 and $5.11 per share.

However, adjusted gross margin declined to 66.3% from 68.4% a year earlier, potentially adding to investor concerns around the costs associated with growing AI infrastructure sales. Barron’s also pointed to the margin decline as one possible reason for the stock reaction.

The decline came after Cisco shares had already rallied more than 60% in 2026, raising expectations heading into the earnings report. Reuters reported that investors appeared to have priced in much of the company’s AI growth before the results.