Cisco has reported a strong first quarter for fiscal 2026, highlighting a rebound in product demand and a clear pivot towards AI infrastructure.
For the quarter ended 26 October 2025, revenue rose 8 percent year-on-year to $14.9 billion, and non-GAAP earnings per share increased 10 percent to $1.00.
Chief Financial Officer Mark Patterson described it as “a solid start to fiscal year ’26”, noting growth across all major customer segments and regions.
Total product orders grew 13 percent, led by a 45 percent increase from service-provider and cloud customers.
Public-sector orders advanced 12 percent and enterprise orders 4 percent.
By geography, the Americas were up 16 percent, EMEA 8 percent and APJC 13 percent.
AI Infrastructure Becomes The Growth Engine
AI-driven networking has become Cisco’s central growth story.
The company booked $1.3 billion in AI infrastructure orders in the quarter and expects to recognise about $3 billion in related revenue during fiscal 2026.
CEO Chuck Robbins described the trend as part of “a multiyear, multibillion-dollar refresh opportunity across the installed base”, adding that “agentic AI queries [are] generating up to 25 times more network traffic than chatbots”.
“This quarter’s performance reflects the early stages of a return to growth as customer demand stabilises and new AI infrastructure ramps – we are executing well, innovating at scale, and remain focused on driving long-term shareholder value.”
Robbins added that new workloads from hyperscale and enterprise customers were driving a new phase of investment.
He also pointed to momentum in industrial networking, with “new ruggedised equipment with orders growing more than 25 percent year-on-year in Q1”.
Silicon, Optics And Margins
Cisco’s advance in AI networking is underpinned by its in-house silicon and optical components.
“All hyperscalers are now customers of these products,” Robbins said, referring to pluggable optics from the Acacia unit.
He highlighted the launch of the Cisco 8223 router, built on the Silicon One P200 chip and capable of 51.2 terabits per second throughput.
The company expects to ship its one-millionth Silicon One chip in the second quarter of fiscal 2026 and extend the architecture across its full portfolio by 2029.
The forthcoming N9100 switch – due in the second half of fiscal 2026 – will integrate NVIDIA’s Spectrum-X technology.
Despite the hardware-intensive mix, margins held firm.
Non-GAAP gross margin was 68.1 percent, with product margin at 67.2 percent and services at 70.7 percent.
Operating cash flow reached $3.2 billion, and the company returned $3.6 billion to shareholders in dividends and buy-backs and still has $12.2 billion remaining under its repurchase programme.
Patterson noted that inventory and purchase commitments had risen.
“Our total inventory and advanced purchase commitments are up almost $1 billion in the last 90 days,” he said.
“On a year-on-year basis they had risen 38 percent, about $3 billion plus.”
Recurring revenue also improved, with annualised recurring revenue grew 5 percent to $31.4 billion and product ARR up 7 percent.
Subscription revenue made up 54 percent of total sales, and software revenue increased 3 percent to $5.7 billion.
Security, Splunk And The Outlook
Cisco’s security business remains in transition as customers adopt its unified Security Cloud.
“Next-generation firewall demand grew in the mid-teens in Q1, with the prior-generation products offsetting this growth,” Robbins said. Nearly 3,000 customers have purchased the new platform since launch.
“Splunk ARR and product RPO grew double digits, driven by strong renewals and continued strength in cloud security and observability,” Robbins said.
For the second quarter, Cisco forecast revenue of $15.0 billion to $15.2 billion and non-GAAP earnings per share of $1.01 to $1.03.
Full-year guidance is for $60.2 billion to $61.0 billion in revenue and $4.08 to $4.14 in earnings per share.
What It Means For IT Leaders
For CIOs and IT decision-makers, the message from Cisco’s results is that network infrastructure is now central to AI strategy.
As organisations deploy larger models and data-heavy applications, they will need faster, more power-efficient switching and routing.
Cisco’s focus on Ethernet-based AI interconnects suggests an effort to make large-scale compute clusters easier to build and manage using familiar tools, rather than proprietary fabrics.
The company’s investment in silicon and optics also points to a future where AI performance and network reliability are deeply intertwined.
For enterprises, this could reduce latency in AI-driven workloads, improve data movement between on-premise and cloud environments, and lower long-term operating costs through greater energy efficiency.
Cisco’s move to integrate Splunk further strengthens its appeal to IT leaders seeking unified visibility and security across hybrid networks.
But there remains some questions about where this fits with the buyer.
“If Cisco can align its infrastructure strength with buyers’ priorities – such as governance frameworks, hybrid operations, worker-experience optimization, and UC reliability – it will turn its technical leadership into UC leadership, said Tim Banting, Head of Research & Business Intelligence at Techtelligence.
“Until then, its story is being heard by Wall Street, but not necessarily by the UC buyer.”
With cybersecurity threats rising alongside AI adoption, the ability to combine telemetry, analytics, and defence in a single stack could become a differentiating factor in enterprise infrastructure planning.
