Cisco Systems (CSCO) shares fell 4.66% in after-hours trading to $118.11, reversing a strong regular-session performance that saw the stock close at $123.88, up 2.46%. The sell-off came despite the company reporting record fourth-quarter revenue, robust annual growth, and $4 billion in quarterly AI infrastructure orders from hyperscale customers. The regular-session rally ahead of the print suggested investors had already priced in elevated expectations, leaving the strong but in-line guidance with limited room to surprise on the upside.

Record Fourth-Quarter Revenue and Earnings

Cisco posted fourth-quarter revenue of $17.3 billion, an 18% increase year over year. Product revenue rose 24%, while services revenue held flat compared with the prior-year quarter. Networking revenue led product growth with a 28% gain. Cisco's fiscal year ends in late July, meaning these results capture enterprise and data-center spending patterns through the end of the company's fiscal 2026.

On a GAAP basis, net income reached $3.9 billion, with diluted earnings per share climbing 52% to $0.97. Non-GAAP net income rose 23% to $4.9 billion, while non-GAAP earnings per share increased 23% to $1.22.

Operating cash flow for the quarter totaled $5.4 billion, up 27% annually. GAAP operating income increased 38% to $4.3 billion, driven by stronger revenue and improved operating efficiency. Non-GAAP operating income rose 23% to $6.2 billion, producing a non-GAAP operating margin of 35.9%.

AI Infrastructure Orders Accelerate

Cisco secured $4 billion in AI infrastructure orders from hyperscale customers during the fourth quarter, bringing total AI infrastructure orders to $9.3 billion for fiscal 2026. The company generated approximately $4 billion in AI infrastructure revenue over the full fiscal year and expects that figure to reach roughly $7.5 billion in fiscal 2027. These orders underscore Cisco's efforts to capture a meaningful share of the data-center buildout driven by large cloud providers deploying AI training and inference clusters, a spending cycle that has benefited a range of networking and semiconductor suppliers.

Total product orders surged 35% year over year in Q4. Even excluding hyperscale customers, orders still increased 25%. Networking product orders climbed 40%, marking the eighth consecutive quarter of double-digit growth. Demand expanded across every geographic region and customer market segment, reinforcing Cisco's assessment that networking demand remains in a strong replacement and expansion cycle — one aided by enterprise upgrades of campus infrastructure and the ongoing adoption of higher-speed Ethernet in AI-ready data centers.

Full-Year Fiscal 2026 Results and Forward Guidance

For the full fiscal year 2026, Cisco reported revenue of $63.3 billion, up 12% from the prior year. GAAP net income increased 30% to $13.3 billion, or $3.33 per share. Annual non-GAAP earnings rose 14% to $4.33 per share.

Looking ahead to fiscal 2027, Cisco guided revenue to a range of $72.2 billion to $73.4 billion, a midpoint that implies roughly 15% annual growth — an acceleration from fiscal 2026's 12% top-line increase. The company projects GAAP earnings per share between $4.00 and $4.06 and non-GAAP earnings per share between $5.05 and $5.11.

For the first quarter of fiscal 2027, Cisco expects revenue between $18 billion and $18.2 billion, with non-GAAP earnings per share of $1.32 to $1.34. Despite the strong outlook, the guidance was not enough to prevent CSCO shares from declining sharply following the earnings release, as investors weighed whether the projected growth trajectory was already reflected in the stock's recent appreciation.