Cisco revenue jumps 24% on AI demand as margins and shares fall

By Marcus Bennett

Cisco Systems (NASDAQ: CSCO) reported quarterly revenue of $18.52 billion, up 24%, and raised its full-year forecast to $74.8 billion–$75.8 billion, according to 24/7 Wall St.

The result sets a concrete market test for AI infrastructure spending: Cisco expects $9 billion this fiscal year from AI networking gear sold to giant cloud companies. The same report put adjusted gross margin (adjusted profit as a percentage of revenue) at 65.6%, down from 68.1% a year earlier.

The shares traded at $98.30 at 7:50 a.m. ET on Friday, down 3.6% from Thursday’s $102.01 close. 24/7 Wall St. called the quarterly revenue growth Cisco’s fastest in more than 15 years.

What did Cisco report?

Revenue reached $18.52 billion, up 24%, while FactSet’s polled analysts expected $18.12 billion. Adjusted earnings reached $1.40 a share, up 40% from a year earlier, against the $1.33 analysts expected. Both figures beat the poll.

Cisco lifted its full-year revenue forecast from $72.2 billion–$73.4 billion to $74.8 billion–$75.8 billion. Chief financial officer Mark Patterson said the increase amounted to $2.5 billion, including $1.5 billion from giant cloud companies.

Cisco also raised its AI networking sales target for those companies to $9 billion this fiscal year from $7.5 billion, according to 24/7 Wall St.’s account of the guidance.

Chief executive Chuck Robbins said: “We are in the very early stages of a multi-year networking supercycle.”

24/7 Wall St. said the AI gear produced less profit per dollar of sales. That tension, rather than weak quarterly numbers, sat beneath the stock reaction.

Why did the shares fall after the beat?

24/7 Wall St.’s headline rounded the move to a 4% fall. Its specified premarket snapshot showed a 3.6% decline.

Adjusted gross margin fell to 65.6% from 68.1% a year earlier. Cisco expects it to remain just under 65% for the year, partly because memory chips cost more, according to the source. AI volume did not translate into richer margins.

Five Wall Street firms cut their price targets—projected share prices—on Friday morning:

• Barclays lowered its target to $109 from $123.
• Piper Sandler cut its target to $112 from $125 and retained a neutral rating.
• Citigroup reduced its target to $120 from $139.
• Wells Fargo lowered its target to $130 from $150.
• Rosenblatt cut its target to $140 from $165.

Price targets moved anyway.

24/7 Wall St. attributed the decline to two factors: the share price already counted on substantial growth, and the fastest-growing business carried a lower margin. Cisco also returned $3.7 billion to shareholders during the quarter.

How did the 1,000-share purchase perform?

24/7 Wall St. placed the split-adjusted close of $80.06 at the top of the dot-com boom on March 27, 2000. The source built its investor example around a woman who bought 1,000 Cisco shares that day. She was 46 and spent $80,060; she is 72 now.

Cisco did not close above $80.06 until Dec. 10, 2025, more than 25 years later. The wait took more than 25 years.

At the article’s $98.30 premarket price, the 1,000 shares carried $98,300 of value, leaving an unrealized gain of $18.24 per share. At Cisco’s June record close of $130.00, the same holding carried $130,000.

When did dividends change the breakeven date?

Cisco began paying dividends in 2011. Through its October payment, investors had received $18.38 per share, or $18,380 on the 1,000-share position, according to 24/7 Wall St.

Counting those distributions, the investor recovered her original $80,060 in February 2025, roughly 10 months before the share price alone crossed her purchase price. Dividends moved the breakeven date forward. Shares plus dividends totaled $116,680, 46% above her investment over more than 26 years.

Cisco pays $0.42 a share each quarter. The source calculated that 1,000 shares generate $1,680 a year, for a dividend yield—annual payments divided by share price—of about 1.7% at $98.30.

What changes in a retirement account?

If the shares sit in a traditional individual retirement account (IRA), the woman’s age becomes the next constraint. She turns 73 next year, when required minimum distributions—or mandatory annual retirement-account withdrawals—begin for people born from 1951 through 1959.

The IRS uses a divisor of 26.5 at age 73. For an IRA holding only these shares at the quoted price, the source estimated a first required withdrawal of about $3,709. The IRS taxes that withdrawal as ordinary income whether the investor sells Cisco or not.

With $650,000 in other retirement savings, Cisco would represent 13% of her $748,300 portfolio. At the June record price, the same allocation represented 17% of $780,000.

Selling 500 shares at the quoted price would raise about $49,150 and reduce Cisco to roughly 7% of her savings. The remaining 500 shares would produce $840 in annual dividends, according to 24/7 Wall St.’s calculation.

The source said an IRA sale itself would owe no tax. In a taxable account, however, the gain on shares bought in 2000 would be $18.24 per share at Friday’s quoted price.

What did the broad-market comparison show?

The source also compared two ways to reinvest the same $80,060. Reinvesting every Cisco dividend into more Cisco shares would have produced about $159,640 by Thursday’s close.

An investor who put the same $80,060 into an S&P 500 index fund on March 27, 2000, with dividends reinvested, would have produced about $637,198, according to 24/7 Wall St.’s calculation.

24/7 Wall St. framed that gap as the opportunity cost of concentrating a retirement account in one company through a full market cycle. The gap captures the cost of waiting.

24/7 Wall St.’s broader lesson was that even a great company bought at a peak can take decades to pay off while the broad market compounds. That makes a concentrated position harder to hold without knowing the next quarterly result. A retiree can trim it to a size supportable through another long wait.

The quarter itself was strong, according to 24/7 Wall St.: revenue and adjusted profit beat forecasts, full-year guidance rose, and Cisco returned $3.7 billion to shareholders. The decline reflected valuation pressure and the lower margin attached to the fastest-growing AI business.

24/7 Wall St.’s sponsor copy frames retirement as a shift from building wealth to sustaining income through good and bad markets. The source then presents a free guide from Fisher Investments called “The Definitive Guide to Retirement Income.” The guide covers retirement costs, cash-flow sources and safe withdrawal amounts.

The guide is presented as a planning resource, and 24/7 Wall St. labels the section as sponsor content.

Cisco’s own forecast makes the next test numerical: $9 billion in AI networking sales to giant cloud companies must arrive while full-year adjusted gross margin stays near its guided level of just under 65%. 24/7 Wall St. said investors were already treating that lower-margin mix as a reason to cut targets despite the stronger AI sales goal.