TLDR
- Cisco shares climbed approximately 13.5% following better-than-expected fiscal Q3 performance, posting revenue of $15.84 billion—an 11.9% increase from the prior year
- The company reported $1.9 billion in AI-related orders for the quarter and elevated its full-year AI order projection to $9 billion from $5 billion
- Five additional hyperscaler design wins were announced, featuring initial deployments of the company’s Silicon One P200 chip
- Fourth-quarter revenue projections of $16.7–$16.9 billion substantially exceeded analyst expectations of $15.82 billion
- Rosenblatt’s Mike Genovese boosted his price objective to a new Wall Street high of $150, suggesting approximately 30% potential upside
Shares of Cisco (CSCO) reached a fresh 52-week peak of $117.70 during Thursday’s trading session, surging as much as 14.6% following the networking giant’s fiscal third-quarter earnings report that exceeded expectations across key metrics and featured forward guidance significantly above analyst projections.
The company recorded quarterly revenue of $15.84 billion, representing an 11.9% year-over-year increase and surpassing consensus estimates by approximately $280 million. Adjusted earnings per share of $1.06 exceeded Wall Street forecasts by $0.02.
However, the headline-grabbing narrative centered on artificial intelligence.
AI-related orders for the quarter totaled $1.9 billion—representing more than triple the $600 million recorded during the comparable period a year earlier. This performance brings the fiscal year-to-date AI order total to $5.3 billion.
Executive leadership increased the company’s full-year fiscal 2026 AI order forecast from $5 billion to $9 billion. To provide perspective, this updated target represents 4.5 times the total AI orders Cisco secured throughout the entirety of fiscal 2025. The company simultaneously raised its FY26 hyperscaler AI revenue projection from $3 billion to $4 billion, while indicating potential to achieve $6 billion in FY27.
Chief Executive Officer Chuck Robbins disclosed that the company secured five additional hyperscaler design wins during the quarter, which included the initial production deployments of Cisco’s proprietary Silicon One P200 chip in scale-across data center architectures.
Networking Segment and Hyperscaler Customer Growth Fuel Performance
The networking division generated $8.8 billion in revenue, marking a 25% year-over-year expansion. Service Provider and Cloud orders experienced dramatic growth of 105% compared to the previous year, with triple-digit percentage increases recorded across all five of Cisco’s major hyperscaler clients.
Demand from enterprise campus customers also accelerated, as organizations expanded their infrastructure capabilities to support inference computing workloads, AI agents, and enhanced security implementations.
Regarding profitability metrics, gross margins contracted by 150 basis points sequentially to 66%. This decline aligned with company projections and resulted from elevated component pricing, which management indicated has now reached stability.
Fourth Quarter Projections and Analyst Response
The company provided fourth-quarter revenue guidance ranging from $16.7 billion to $16.9 billion—markedly above Wall Street’s consensus estimate of $15.82 billion. Adjusted EPS guidance of $1.16–$1.18 similarly exceeded analyst expectations of $1.07.
Mike Genovese from Rosenblatt, recognized among the top 1% of Wall Street analysts, elevated his price target for CSCO from $100 to $150—establishing a new Street-high benchmark—while maintaining his Buy recommendation. This target implies approximately 30% appreciation potential from current trading levels over the coming twelve months.
Genovese observed that following two consecutive quarters of double-digit revenue expansion, Cisco now “seems likely” to maintain double-digit growth trajectory. He additionally highlighted that the company possesses “other levers” to sustain operating margins exceeding 34% even if component costs experience upward pressure.
The broader Wall Street consensus price target stands at $124.54, implying roughly 8% upside potential. The overall analyst rating reflects a Moderate Buy, derived from 11 Buy ratings and 6 Hold ratings.
CSCO has advanced 54.8% year-to-date entering Thursday’s trading session. Investors who allocated $1,000 to the stock five years ago would currently hold a position valued at approximately $2,225 today.
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