Cisco Stock Fell 6% as Margins Slipped

Key Points:

• Cisco reported fiscal Q4 revenue of $17.3 billion and non-GAAP earnings of $1.22 per share, both exceeding analyst expectations, with total product orders up 35% and AI infrastructure orders hitting $4 billion for the quarter.
• Despite strong revenue, Cisco's non-GAAP gross margins declined to 66.3% from 68.4% a year earlier, with product gross margin also falling, and the company expects continued margin compression in Q1.
• Inventories increased significantly to $5.69 billion from $3.16 billion, while full-year operating cash flow remained flat at $14.2 billion despite a 30% rise in GAAP net income to $13.3 billion.
• For fiscal 2027, Cisco projects revenue between $72.2 billion and $73.4 billion, non-GAAP EPS of $5.05 to $5.11, and approximately $7.5 billion in AI infrastructure revenue.
• Cisco's CFO highlighted the company's achievement of its highest productivity metrics in 30 years during fiscal 2026.