Cisco Sets FY26 Revenue Target at $59B-$60B, AI Infrastructure Key Growth Driver

Cisco Systems has set a revenue target of $59B-$60B for FY26, with AI infrastructure expected to be a major growth driver. In Q4 2025, the company reported revenue and gross margin at the high end of guidance, with earnings per share above the guidance range. CEO Charles H. Robbins attributed the strong finish to fiscal 2025 to robust sales of AI infrastructure.

Cisco Systems (NASDAQ:CSCO) has set an ambitious revenue target for fiscal year (FY) 2026, aiming for $59 billion to $60 billion, with AI infrastructure expected to be a significant growth driver [2]. The company's strong finish to fiscal 2025, which ended on July 26, 2025, was bolstered by robust sales of AI infrastructure, according to CEO Charles H. Robbins [4].

In the fourth quarter (Q4) of FY2025, Cisco reported revenue and gross margin at the high end of its guidance. The company's adjusted earnings per share (EPS) of 99 cents were above the guidance range of 97 cents to 99 cents [4]. This performance underscores the company's ability to capitalize on the growing demand for AI infrastructure, a trend that is expected to continue into FY2026.

The company's AI infrastructure segment has become a linchpin of its growth strategy. In Q4 2025, AI infrastructure orders surged to $350 million, bringing the first-half total to $700 million. Cisco now expects $2 billion in AI infrastructure orders for FY2025, more than doubling its initial target [2]. This growth is driven by the increasing need for high-speed, low-latency networks to support AI workloads and the growing reliance on hybrid cloud architectures.

Cisco's pricing power and operational efficiency are evident in its non-GAAP gross margin of 68.7% in Q2 2025, which highlights its premium positioning in the market [2]. The company's shift towards software and services, which offer higher margins and recurring revenue streams, aligns with broader industry dynamics.

Looking ahead, Cisco's full-year revenue guidance of $56.0–$56.5 billion implies a 6–7% growth rate, a modest but stable trajectory in a sector prone to boom-and-bust cycles [2]. The company's diversified customer base and its ability to cross-sell AI infrastructure solutions across its existing portfolio contribute to this predictability.

While the outlook is largely positive, investors should not ignore headwinds such as proposed tariffs and increasing competition in the AI infrastructure market. However, Cisco's ecosystem advantage, which integrates AI infrastructure with its broader security, cloud, and collaboration tools, provides a defensible moat against rivals like Arista Networks and Juniper Networks [2].

For long-term investors, Cisco represents a compelling case study in strategic reinvention. The company's earnings beat and guidance suggest that it is not only keeping pace with demand but also managing costs and capital efficiently. While the stock may not offer the explosive growth of pure-play AI startups, its combination of revenue growth, margin resilience, and shareholder returns makes it a defensive yet opportunistic play in a sector defined by uncertainty.

References:
[1] https://seekingalpha.com/news/4484888-cisco-capitalizes-on-ai-demand-shares-slip-as-fy26-outlook-lands-in-line-with-estimates
[2] https://www.ainvest.com/news/cisco-ai-infrastructure-momentum-earnings-beat-strategic-bet-future-networking-2508/
[3] https://www.cnbc.com/2025/08/13/cisco-csco-q4-earnings-report-2025.html
[4] https://www.inkl.com/news/cisco-q4-earnings-revenue-beat-eps-beat-strong-guidance-company-sees-massive-ai-infrastructure-opportunity-ahead