Cisco Stock Drops 8-9% Despite Earnings Beat and AI Growth

Cisco CSCO closed fiscal Q4 2026 with revenue of $17.3 billion, up 18% year over year and ahead of the roughly $16.8 billion consensus, and non-GAAP EPS of $1.22, up 23% . Full-year revenue reached $63.3 billion, up 12%. Guidance was strong as well: fiscal 2027 revenue of $72.2 billion to $73.4 billion and non-GAAP EPS of $5.05 to $5.11, both above Street models .

The stock fell 8.4% to $113.47 anyway . The pressure point was gross margin, which compressed about 2.1 points year over year as lower-margin AI hardware took a larger share of the mix . That is the tension in Cisco's AI story: the orders are real, but they arrive at a worse margin than the software and services revenue investors had been paying a premium for. The sell-off was a margin reaction, not a guidance reaction.

On the orders themselves, Cisco booked $9.3 billion of AI infrastructure orders across fiscal 2026. That is a cumulative full-year figure rather than a single quarter , a distinction worth holding onto because the number is frequently quoted as quarterly.

The read-through for the networking complex is that AI demand is converting into revenue faster than it converts into profit dollars. What to watch next quarter is whether management can hold the fiscal 2027 margin framework while AI hardware keeps scaling, and whether the same mix pressure surfaces at ANET and other AI-adjacent networking names.

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