Cisco will announce its fiscal year 2026 second-quarter earnings after the U.S. stock market closes on Wednesday.
According to Zhitong Finance APP, $Cisco (CSCO.US)$ The company is set to announce its second-quarter results for the fiscal year 2026 after the U.S. stock market closes on Wednesday. Wall Street analysts predict earnings per share of $1.02, representing an 8.5% year-over-year increase. Revenue is expected to reach $15.12 billion, marking an 8.1% rise compared to the same period last year.
Analysts expect revenue from the networking products business to potentially reach $7.74 billion, representing a 13% year-over-year increase; revenue from the observability products business is projected to reach $298.26 million, up 7.7% year-over-year; and security product revenue is estimated at $2.15 billion, marking a 2% year-over-year increase. Additionally, analysts predict that collaboration product revenue will reach $984.25 million, reflecting a 1.2% year-over-year decline.
Analysts forecast product revenue to reach $11.26 billion, reflecting a 10.1% year-over-year increase. Service revenue is anticipated to hit $3.85 billion, showing a 2.6% year-over-year growth.
Analysts anticipate the company’s non-GAAP gross profit to be $7.56 billion, higher than $6.92 billion in the same period last year. Non-GAAP gross profit for the services business is projected to reach $2.73 billion, surpassing last year's figure of $2.69 billion.
Cisco’s earnings and revenue declined in fiscal year 2024 but began to show year-over-year growth starting in fiscal year 2025. Following the release of its financial report in November last year, the company’s stock price surged significantly. For the quarter ended October, earnings per share grew by 10% to $1, while revenue increased by 8% to $14.9 billion. The networking segment experienced the fastest growth, rising 15% to $7.8 billion.
After years of stagnation following the burst of the Internet bubble, Cisco’s recovery has been driven by successful business diversification. Through acquisitions of companies such as Webex, AppDynamics, and Splunk, it has effectively diversified from network hardware into software and service sectors. Moreover, over the past year, Cisco’s stock performance has outpaced the broader market, benefiting continuously from the artificial intelligence investment cycle, most notably securing a $1.3 billion AI infrastructure order.
Investors will focus on management’s commentary regarding the momentum of the company’s AI infrastructure business and its backlog of orders. As of the end of October, the company’s remaining performance obligations (RPO) stood at $42.9 billion, representing a 7.2% year-over-year increase.
Last week, UBS Group analyst David Vogt reiterated a “Buy” rating for Cisco with a target price of $90. Based on industry surveys, the analyst expects Cisco’s revenue to exceed his previous forecast of $15.05 billion, driven by improvements in the core enterprise market. Vogt predicts product orders will achieve near double-digit growth, compared to a 13% increase in the previous quarter.
Although AI orders are difficult to predict, Vogt noted that Meta Platforms (META.US), one of Cisco’s key AI partners, reported capital expenditures of $22.1 billion for the fourth quarter of 2025, a 49% year-over-year increase, and announced a median capital expenditure forecast of $125 billion for 2026, reflecting nearly a 73% year-over-year rise. Given that AI orders in the first quarter of fiscal year 2026 benefited from approximately $650 million in ‘exceptionally strong’ optical module orders, Vogt conservatively forecasts Cisco’s AI orders to remain flat quarter-over-quarter at around $1.3 billion, accounting for about 20% of its $6.2 billion AI order target for fiscal year 2026.
Meanwhile, Evercore analyst Amit Daryanani reiterated a “Buy” rating for Cisco with a target price of $100. Following Cisco’s AI Summit, the analyst highlighted that the company offers multiple solutions, including Silicon One’s G200, systems based on P200, and optical modules (Acacia). These solutions help drive the transition to pluggable solutions and facilitate the shift from copper to fiber optics. Daryanani also spotlighted Cisco’s offerings in the security business sector. Overall, he believes the ongoing construction of AI infrastructure benefits Cisco, coupled with “an increasingly optimized software layer being built around agent-based AI,” both of which will positively impact Cisco’s development.
As Cisco prepares to release its fiscal year 2026 second-quarter earnings report, Wall Street's consensus rating for Cisco stock is 'Strong Buy,' based on 11 'Buy' ratings and 3 'Hold' ratings. The average target price for Cisco stock is $90.80. Cisco stock’s dividend yield stands at 2.1%.
However, Cisco still faces risks from customers delaying technology upgrades or major cloud service providers slowing their investment pace – if the company’s outlook disappoints, the pre-earnings stock price rally could quickly reverse. Investors remain concerned about a lag between artificial intelligence investments and actual profitability.
According to TipRanks’ options tool, options traders expect Cisco’s stock to experience approximately 5.97% volatility following the release of its fiscal year 2026 second-quarter earnings report.
Editor/Jayden
