The Zhitong Finance App learned that investment bank Piper Sandler analyst James Fish maintained a “neutral” rating for Cisco (CSCO.US) while lowering the target price from $132 to $125. Analysts said they lowered their expectations for price-earnings ratio multiples in light of market concerns that the network equipment industry's growth may be nearing its peak.
Cisco's stock price hit a record high in June, with a cumulative increase of 57% over the past 12 months. During the same period, the company's revenue soared along with the artificial intelligence (AI) boom. According to financial reports released last month, Cisco's revenue for the fourth fiscal quarter ending July 25, 2026 increased 18% year-on-year to US$17.3 billion — setting a quarterly record, with adjusted earnings per share (EPS) of $1.22, all exceeding analysts' expectations.
AI became the biggest highlight of the fourth fiscal quarter results. Cisco's AI infrastructure orders from hyperscalers (hyperscalers) reached $4 billion in the fourth fiscal quarter, accounting for 43% of the $9.3 billion in such orders for the full year 2026. At the same time, product orders increased 35% year over year, and increased 25% even after excluding hyperscale cloud service providers, indicating that demand was not entirely driven by AI customers.
The importance of Cisco's role in AI data center construction is growing. In the past, Cisco was regarded as a traditional network equipment giant for a long time, and its core business focused on enterprise networks, campus networks, switches, routers, etc. As the demand for high-speed networks, low-latency connections, and data center interconnection increases in AI training and inference clusters, the importance of network equipment has increased markedly, and Cisco is trying to secure a larger share of this round of AI infrastructure capital expenditure.
Cisco has announced a restructuring this year to invest more resources in the AI market, and plans to cut less than 5% of its workforce. The company previously said that related restructuring could result in up to $1 billion in severance and other one-time costs. In other words, AI is not a single quarterly topic, but the direction of Cisco's resource reallocation.
Cisco's guidance for the 2027 fiscal year was significantly higher than analysts' expectations. The company expects revenue for the 2027 fiscal year to be 72.2 billion to 73.4 billion US dollars, which is about 6% higher than market expectations; the adjusted EPS is expected to be 5.05 to 5.11 US dollars, and the median range value is nearly 6% higher than market expectations.
However, for the first time, Cisco has given an AI revenue forecast for the full year — about 7.5 billion US dollars for the 2027 fiscal year, accounting for only about 10% of the total estimated annual revenue, while the company's cumulative AI-related orders have reached 9.3 billion US dollars in the past year. This gap has caused the market to doubt the efficiency of order conversion.