Cisco Q3 strong, cashes in on AI infrastructure boom

Cisco reported strong third quarter results and raised its fourth quarter outlook as it cashes in on the AI infrastructure boom.

In the third quarter, Cisco reported third quarter earnings of 85 cents a share on revenue of $15.8 billion, up 12% from a year ago. Non-GAAP earnings in the third quarter were $1.06 a share.

Wall Street was looking for non-GAAP earnings of $1.04 a share on revenue of $15.56 billion.

But the outlook was the big news. Cisco said it is expecting fourth quarter revenue of $16.7 billion to $16.9 billion, more than $1 billion ahead of estimates. Non-GAAP earnings in the fourth quarter will be $1.16 a share to $1.18 a share.

CEO Chuck Robbins said "we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI."

By the numbers for the third quarter:

• Product orders in the quarter were up 35% from a year ago and 19% excluding hyperscalers.
• Network product orders were up more than 50% from a year ago.
• AI revenue for fiscal 2026 is expected to be $4 billion.
• Campus networking orders were up 25% from a year ago and data center switching orders were up 40% from a year ago.

On a conference call, Robbins said:

• "Networking product orders continue to accelerate, growing more than 50% in Q3, driven by triple-digit growth in service provider routing and compute and double-digit growth in data center switching, campus switching, wireless, enterprise routing and industrial IoT products. This marks the seventh consecutive quarter of double-digit growth for our networking portfolio overall."
• "The year-to-date total of $5.3 billion in orders taken from hyperscalers already exceeds our prior expectations of $5 billion for FY '26 with a full quarter remaining. Given the strong demand, we now expect to take AI infrastructure orders of approximately $9 billion from hyperscalers in FY '26. 4.5x our FY '25 total."
• "Our industrial IoT portfolio also reported its strongest quarter ever in Q3 and has now grown in double digits for 8 consecutive quarters. We expect this demand to continue with the onshoring of manufacturing to the United States and as agentic and physical AI are expected to drive massive increases in network traffic."
• "We see continued expansion of a focus on AI in the enterprise. We see customers now preparing for inferencing and agentic applications. And in those cases, the network is incredibly important and moving the bits around with low latency is super important and customers are realizing that they have to modernize. That's why we saw our enterprise data center switching business up over 40% in orders for the quarter. And that's just pure enterprise build-out."