Cisco Q4 Earnings: CEO Robbins Says AI, Security Spending Driving Network Refreshes

‘Most of our enterprise customers today recognize we are in the midst of probably the fastest-moving technology transition that we’ve ever seen,’ says Cisco Chair and CEO Chuck Robbins.

Cisco Systems Chair and CEO Chuck Robbins dismissed concerns that the networking vendor is at the peak of what he calls a “super cycle” of growth, citing enduring long-term opportunities from artificial intelligence infrastructure, security updates spurred by Anthropic’s Mythos model and the pending quantum computing era.

“Those are all drivers of what we’ve been talking about relative to just an overarching campus refresh where, for the first time ever, we’ve had our campus networking, our switching, routing, as well as wireless and everything—all of those are going through a refresh at the same time,” Robbins (pictured) said on the San Jose, Calif.-based vendor’s latest quarterly earnings call Wednesday.

The vendor covered results for the fourth quarter of its 2026 fiscal year, covering the three months ended July 25, as well as the entire fiscal year.

Cisco CEO: AI, Security, Quantum Drive Refresh Cycle

As an example of Mythos’ impact on the channel overall, Juan Orlandini, CTO of Chandler, Ariz.-based solution provider giant Insight Enterprises, told CRN in a recent interview that the AI model has put pressure on customers to improve security postures.

“In the past, it was OK to sweat a server past its end of life and just assume that, ‘Hey, I’m going to keep running that server until it dies and then I’ll just buy a new one,’” Orlandini said. “The problem is that when that server is no longer being supported by the OEM that server’s firmware is not being updated by the OEM and the firmware is a vector for attacks now.”

Insight has been working with customers to navigate where to upgrade equipment to prevent increased attack vectors, the CTO said.

“We have got to worry about this across the whole spectrum, and our customers are seeing the pressure across the entire spectrum of compute,” he said.

Anthropic’s Mythos Influences Enterprise Security Spending

Robbins told analysts on the call that “customers are reprioritizing spending within existing budgets and increasingly viewing readiness spending around AI, Mythos and quantum-related vulnerabilities as ‘not optional.’”

“That’s creating a shift of dollars from other areas in the organizations to IT to actually do that work,” Robbins said.

Although Cisco hasn’t seen “a massive amount of impact” from Anthropic’s Mythos yet, a Mythos-influenced pipeline is growing as customers engage in early conversations around infrastructure assessments, last-day-of-support deadlines, getting rid of equipment past those deadlines and the ability to patch various parts of the IT estate.

In the name of improved cybersecurity, customers are refreshing their networks, Robbins said. The spending “is really showing up as a network refresh, but is probably underneath viewed as a cybersecurity spend,” the CEO said.

A July report from KeyBanc said that one-fifth of surveyed CIOs and one-third of VARs reported increased security spend due to concerns around Mythos, with that spend focused on services and labor as opposed to software. For organizations that did spend more on software, the spend concentrated on penetration testing, frontier models and patching, for example, according to the investment firm.

“Most of our enterprise customers today recognize we are in the midst of probably the fastest-moving technology transition that we’ve ever seen,” Robbins said. “There’s a combination of ensuring that they’re moving with enough caution that they actually get this right but not moving too slow to where their competition actually creates a competitive differentiation that that puts them at a disadvantage.”

“They all have a real recognition that if they were to pause, they put the companies that they run at risk,” he continued.

Cisco Sees Growth In Infrastructure Assessments

A potential signal of growing demand for Cisco’s platform approach and equipment assessment capabilities came in a white-glove program for Cisco’s Cloud Control unified operations platform for managing, monitoring and defending enterprise IT infrastructure, which now has about 4,500 customers signed up, Robbins said. The Cisco IQ assessment platform has more than 8,600 customers.

Assessments give Cisco—and its solution providers—a displacement opportunity for competitor equipment that is past last day of support, Robbins said.

Robbins Feels Well-Positioned For AI Boom

Cisco is well-positioned for the AI era with a full-stack portfolio spanning systems, silicon, optics, security and observability, the CEO said.

Robbins said that the network traffic related to AI-based scale-across compared with traditional Data Center Interconnect is roughly 14 times larger. Cisco is uniquely positioned for the trend thanks in part to its P200 deep-buffer routing and switching chip, the CEO said.

Its Acacia optics business had another billion-dollar quarter, with Cisco landing its first design win in optical networking. Cisco is also starting to deploy multi-rail systems in its platforms as well.

“If you look at the opportunity for scale-across, it’s massive,” Robbins said. “We believe that we’re very well-positioned to take advantage of that as we go forward.”

AI users leveraging cloud-based models are good news for Cisco, and those users turning to open-weight models and on-premises models is also a Cisco win “because it means they will invest in more enterprise private data center networking, which we’ve seen the last two quarters,” Robbins said. The third fiscal quarter saw more than 40 percent growth in that business. The fourth quarter saw more than 35 percent.

Running thousands of agents across infrastructure and edge deployments also creates opportunities for networking performance and latency upgrades, Robbins said.

In a signal of AI growth from the quarter, Cisco reported that in its enterprise business, Nexus network switch orders tagged for AI deployments grew more than 85 percent sequentially.

Cisco’s adoption of AI internally led to 145,000 support cases resolved in the fiscal year with zero human intervention. The vendor’s Circuit on-premises proprietary AI assistant supported more than 75 million prompts in the latest quarter.

Navigating Supply Chain, Component Cost Pressures

Unlike some technology vendors experiencing supply chain issues with various data center components, Cisco doesn’t “have any significant lead time issues that we’re seeing,” CFO Mark Patterson said.

He pointed to Cisco joining a $2.5 billion funding raise for Taiwanese memory chip maker Nanya Technology earlier this year as well as a direct relationship with Taiwan Semiconductor Manufacturing Co. (TSMC) for silicon supply as efforts that have helped with supply.

“We’ve got adequate supply to meet not only the guide for FY27, but if demand actually strengthens and goes above that, we feel like we’re in really good shape to meet that as well,” the CFO said.

Although the increased demand in hardware will put pressure on Cisco’s margins, Robbins stood by pursuing those deals because “it allows us to take, even in some cases, a lower- margin business from a gross margin perspective, that actually turns out to be highly profitable because we don’t have to add incremental expenses to go gather that business.”

“These are strategic decisions we’re making about business to pursue, and we feel really good about the profitability impact of those businesses,” the CEO said.

Patterson attributed about 5 points of top-line revenue growth in the quarter to price increases, which impacted the first half of the year more than the second. Cisco forecasts another 4 to 5 points of impact in the new fiscal year.

“Price increases are certainly a last resort for us,” Patterson said. “We’re doing everything we can to secure the right supply at the right prices and build up strategic inventory where needed and advance purchase commitments.”

Commenting on Cisco’s work to achieve greater efficiencies in memory use in light of tight supply and growing costs, the CFO said that Cisco has more than 30 different programs aimed at improving efficiency in the space.

Security Business Gains Momentum

Cisco’s executives on the call reported a variety of growth measures in the vendor’s security business.

Security grew 14 percent year over year in the quarter. The vendor expects the security business to exit Fiscal Year 2026 with full-year growth in overall security in the low single digits.

In the core Cisco security portfolio during the quarter, more than 1,500 customers purchased new products, including Secure Access and Hypershield.

Some large on-premises Splunk deals during the quarter helped the overall security business’ growth, Patterson told analysts on the call.

Splunk added more than 280 new logos to its customer base and secured the highest number of competitive wins in any quarter in Fiscal Year 2026. Cisco exceeded its target of 1,000 new logos for the year, Robbins said.

Cisco’s firewall business saw a second consecutive quarter of 30 percent growth, Robbins added. “We think that’ll just continue to get better next year,” the CEO said.

Cisco Q4 Results: Revenue, AI Infrastructure, Regional Performance

The vendor reported double-digit growth in its fourth quarter and fiscal year, exceeding the high end of its previously given guidance ranges.

Product orders for the quarter increased 35 percent year on year. Excluding hyperscalers, the growth was 25 percent. Cisco reported double-digit growth in every geography and customer market.

Revenue from the Americas grew 18 percent year on year, according to Cisco. The Europe, Middle East and Africa (EMEA) region grew 19 percent. The Asia-Pacific, Japan and China (APJC) region grew 14 percent.

In customer markets, service providers and cloud led with 95 percent growth in the quarter. Cisco saw public sector up 30 percent. Enterprise grew 21 percent.

Cisco’s networking product orders grew 40 percent year on year in the quarter, an eighth consecutive quarter of double-digit growth, according to the vendor. The networking business saw triple-digit growth in service provider routing and Acacia optics and double-digit growth in data center switching, compute, campus switching, wireless, enterprise routing and Industrial IoT products.

Orders for the Industrial IoT portfolio grew double digits for the ninth consecutive quarter, with acceleration in the latest quarter.

More than half of Cisco customers purchased both campus and data center networking products. And during the quarter, overall data center networking orders grew more than 35 percent year over year. Campus networking product orders grew 20 percent year over year, according to the vendor.

The vendor saw $4 billion in hyperscaler AI infrastructure orders in the quarter. The fiscal year total came in at $9.3 billion. The business delivered about $4 billion in revenue in the fiscal year.

Cisco reported $17.3 billion in revenue for the quarter, up 18 percent year on year. Its operating margin using GAAP was 24.7 percent. Without GAAP, the margin came in at 35.9 percent.

Product revenue increased 24 percent year on year during the quarter to $13.5 billion. Networking grew 28 percent, with triple-digit growth in AI infrastructure and double-digit growth in data center switching.

The collaboration business, which includes Webex, increased 12 percent, the best quarterly performance in seven years. Video devices grew 40 percent year over year. And the observability business increased 6 percent.

Services revenue was flat year on year at $3.8 billion, according to Cisco. Net income was $3.9 billion for the quarter using GAAP and $4.9 billion without GAAP.

GAAP operating income was $4.3 billion, up 38 percent year on year. The GAAP operating margin was 24.7 percent. Non-GAAP operating income was $6.2 billion, up 23 percent year on year.

For the fiscal year, Cisco brought in $63.3 billion in revenue, up 12 percent year on year. The vendor reported a similar operating margin for the year to the quarterly one.

The GAAP operating income for the year was $15.4 billion, up 31 percent year on year. Non-GAAP operating income came in at $22 billion, up 13 percent.

The vendor achieved its highest productivity metrics in 30 years measured by revenue, non-GAAP operating margin and earnings per employee, according to Cisco.

Net income for the fiscal year using GAAP was $13.3 billion, up 30 percent year on year. Without GAAP, net income was $17.2 billion, up 13 percent. Cisco generated $14.2 billion in cash flow from operating activities in fiscal 2026, about the same as the prior year.

Cisco has a remaining performance obligation (RPO) of $46.7 billion, up 7 percent year on year in total. Product RPO grew 9 percent. Services RPO grew 6 percent.

Total annual recurring revenue at the end of the quarter was $32.1 billion, up 3 percent year on year. Product ARR grew 5 percent.

Total software revenue was $6.2 billion for the quarter, up 11 percent year on year.

Cisco Forecasts AI Infrastructure Growth In Fiscal 2027

Cisco executives expect $7.5 billion in revenue from the hyperscaler AI infrastructure business in the 2027 fiscal year, according to the vendor.

The vendor expects $18 billion to $18.2 billion in revenue for the first fiscal quarter. Cisco expects $72.2 billion to $73.4 billion in revenue for the 2027 fiscal year.

Patterson told analysts on the call that he expects the core business to grow about 10 percent year on year, “significantly faster” than numbers Cisco shared at a prior investor day. He warned that, overall, tough comparables to the prior fiscal year prompted a more conservative outlook in parts of fiscal year 2027.

He sees the security and observability businesses going from low-single-digit growth in full-year fiscal 2026 to high-single-digit growth in full-year fiscal 2027. The services business should turn positive in full-year fiscal 2027, with gradual improvement through the year hitting a low-single-digit growth range.

Patterson put security growth in the mid to high single digits in the first fiscal quarter and improving through the year.

Cisco’s stock traded at about $119 a share Wednesday after market close, down about 4 percent.

Steven Burke contributed to this story.