Key Highlights

  • Shares trading down 6.13% pre-market to $116.28, reversing Wednesday's 2.86% regular-session gain
  • Record fiscal Q4 2026 Revenue of $17.3 billion beat the $16.8 billion estimate, up 18% year-over-year
  • Adjusted EPS of $1.22 beat the $1.17 estimate
  • Fiscal 2027 guidance of $72.2 billion to $73.4 billion in revenue topped Wall Street's $68.7 billion estimate
  • Investors appear focused on flat services revenue, which missed expectations, and Margin pressure from hardware price increases
  • AI infrastructure orders from hyperscalers reached $9.3 billion for the full fiscal year, and the company raised its price target from several analysts including Morgan Stanley

Shares Reverse Course Despite Record Results

Cisco Systems (NASDAQ:CSCO) shares are falling sharply in pre-market trading Thursday, down 6.13% to $116.28, reversing Wednesday's 2.86% regular-session gain despite reporting record fiscal fourth-quarter results. Revenue reached $17.3 billion, up 18% year-over-year and beating the $16.8 billion estimate, with adjusted EPS of $1.22 topping the $1.17 estimate, alongside fiscal 2027 revenue guidance of $72.2 billion to $73.4 billion that topped Wall Street's $68.7 billion estimate.

Cisco Systems, founded in 1984 and headquartered in San Jose, California, is a global leader in the Communication Equipment industry, designing, manufacturing, and selling IP-based networking hardware, software, and services. Its core portfolio spans switching, enterprise routing, wireless solutions, network security including SASE and threat intelligence, and collaboration tools like Webex, complemented by observability and technical support services, serving a diverse global customer base from enterprises and service providers to governments and public institutions.

Investors Focus on Flat Services Revenue and Margin Pressure

Investors appear to be selling on flat services revenue, which missed expectations, alongside CFO commentary on hardware price increases as a 'last resort' to offset memory costs, and profit-taking after the stock's roughly 60% year-to-date rally, even as a broader tech-sector risk-on tone followed strong AI infrastructure Earnings from CoreWeave (NASDAQ:CRWV) and Super Micro Computer (NASDAQ:SMCI) and softer-than-expected July CPI data.

Total product orders grew 35% year-over-year in the fourth quarter, with hyperscaler orders up triple digits, enterprise up 21%, public sector up 30%, and service provider and cloud up 95%. AI infrastructure orders from hyperscalers reached $9.3 billion for the full fiscal year, plus over $1 billion from Neo Cloud, sovereign, and enterprise customers, driving what management described as a 'networking supercycle' powered by AI, agentic security, and infrastructure modernization. Institutional sentiment remains mixed, with Wall Street's consensus rating still 'Reduce,' even as several analysts including Morgan Stanley raised their price targets to $135 following the results.

Conclusion

Cisco Systems' 6.13% pre-market decline, despite record fiscal fourth-quarter results and guidance that topped Wall Street estimates, reflects investors focusing on flat services revenue and margin pressure from hardware pricing rather than the headline beat. With AI infrastructure orders reaching $9.3 billion for the fiscal year and several analysts raising price targets following the report, the stock's next moves will likely hinge on whether the 'networking supercycle' narrative can offset near-term margin concerns.