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Cisco Cashes in on AI Order Momentum: More Upside Ahead in 2026?
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Key Takeaways
CSCO AI orders hit $2.1B in Q2 FY26, up from $1.3B in Q1, matching full FY25 levels.
Hyperscaler demand surged with triple-digit growth, driving large, frequent AI infrastructure deals.
Partnerships with NVIDIA and AMD, plus global projects, expand Cisco's AI market reach.
Cisco Systems (CSCO - Free Report) is witnessing a sharp acceleration in AI-related demand, especially from hyperscalers. AI orders in second-quarter fiscal 2026 increased to $2.1 billion from $1.3 billion in first-quarter fiscal 2026, which is equivalent to the entire fiscal 2025 AI orders. The AI order for fiscal 2026 has been pegged at more than $5 billion, which is a sign of step-function acceleration instead of incremental growth.
Hyperscaler demand is the core engine of AI momentum, driven by large cloud players placing massive orders. Service provider and cloud orders grew 65% year over year, while hyperscaler demand recorded triple-digit growth. During the same quarter, new AI use cases included two wins in systems and one in optics.
A small number of customers are placing large, lumpy orders, but both the frequency and size of these orders are increasing. As a result, Cisco is becoming a preferred secondary, and in some cases primary vendor, benefiting from the need for supplier diversification and rising demand for high-performance networking.
Cisco is actively expanding its total addressable market (TAM) by deepening strategic partnerships across the AI ecosystem. CSCO’s collaboration with NVIDIA has seen engagements rise 70% sequentially, indicating accelerating joint activity in AI deployments. At the same time, its joint efforts with AMD further reinforce its position within high-performance computing environments. These partnerships are complemented by large-scale AI infrastructure initiatives, such as projects in Saudi Arabia, where Cisco is contributing to foundational AI buildouts.
Cisco’s diversified portfolio, strong hyperscaler relationships and expanding presence with emerging cloud clients provide a solid foundation for sustained growth. The company projects third-quarter fiscal 2026 revenues of $15.4-$15.6 billion and 2026 revenues of $61.2-$61.7 billion, reflecting confidence in the continuation of its AI-driven momentum and setting the stage for next-generation infrastructure leadership.
Cisco Faces Stiff Competition in the AI Space
Arista Networks (ANET - Free Report) is rapidly outpacing Cisco in AI infrastructure with 800 Gbps Etherlink platforms, ultra-low latency and advanced features built for hyperscaler clusters. The company leverages its Linux-based EOS and CloudVision software to deliver superior programmability and real-time workload visibility, strengthening its leadership in AI networking. With AI revenues projected at $3.25 billion in 2026, gross margins between 62% and 64%, $10.7 billion in cash as on end of the fourth quarter of 2025, and a $1.6 billion buyback program for 2025, Arista Networks' prospects are bright.
Dell Technologies (DELL - Free Report) is intensifying competition with Cisco through its “AI Factory” initiative, delivering pre-integrated systems that simplify deployment and speed AI adoption. The company shipped $9.5 billion in AI servers in the fourth quarter of fiscal 2026 and commands a $43 billion backlog, highlighting stronger enterprise traction. Leveraging its $100 billion hardware scale and supply-chain dominance, Dell demonstrates procurement strength that positions it as a formidable rival to Cisco in the AI-infrastructure race.
CSCO’s Price Performance, Valuation & Estimates
Shares of Cisco have rallied 15.7% year to date, outpacing the Zacks Computer and Technology sector’s return of 7.6% but underperforming the Zacks Computer – Networking industry’s return of 16.3%.
CSCO’s YTD Price Performance
Image Source: Zacks Investment Research
CSCO appears overvalued, as shares are trading at a forward 12-month price-to-sales ratio of 5.58, which is higher than the industry’s 5.33X. Cisco carries a Value Score of F.
CSCO’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CSCO’s fiscal 2026 earnings is pegged at $4.16 per share, up by a penny over the past 30 days and implying year-over-year growth of 9.19%.
View the Zacks #1 Rank List
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Cisco Cashes in on AI Order Momentum: More Upside Ahead in 2026?
Key Takeaways
Cisco Systems (CSCO - Free Report) is witnessing a sharp acceleration in AI-related demand, especially from hyperscalers. AI orders in second-quarter fiscal 2026 increased to $2.1 billion from $1.3 billion in first-quarter fiscal 2026, which is equivalent to the entire fiscal 2025 AI orders. The AI order for fiscal 2026 has been pegged at more than $5 billion, which is a sign of step-function acceleration instead of incremental growth.
Hyperscaler demand is the core engine of AI momentum, driven by large cloud players placing massive orders. Service provider and cloud orders grew 65% year over year, while hyperscaler demand recorded triple-digit growth. During the same quarter, new AI use cases included two wins in systems and one in optics.
A small number of customers are placing large, lumpy orders, but both the frequency and size of these orders are increasing. As a result, Cisco is becoming a preferred secondary, and in some cases primary vendor, benefiting from the need for supplier diversification and rising demand for high-performance networking.
Cisco is actively expanding its total addressable market (TAM) by deepening strategic partnerships across the AI ecosystem. CSCO’s collaboration with NVIDIA has seen engagements rise 70% sequentially, indicating accelerating joint activity in AI deployments. At the same time, its joint efforts with AMD further reinforce its position within high-performance computing environments. These partnerships are complemented by large-scale AI infrastructure initiatives, such as projects in Saudi Arabia, where Cisco is contributing to foundational AI buildouts.
Cisco’s diversified portfolio, strong hyperscaler relationships and expanding presence with emerging cloud clients provide a solid foundation for sustained growth. The company projects third-quarter fiscal 2026 revenues of $15.4-$15.6 billion and 2026 revenues of $61.2-$61.7 billion, reflecting confidence in the continuation of its AI-driven momentum and setting the stage for next-generation infrastructure leadership.
Cisco Faces Stiff Competition in the AI Space
Arista Networks (ANET - Free Report) is rapidly outpacing Cisco in AI infrastructure with 800 Gbps Etherlink platforms, ultra-low latency and advanced features built for hyperscaler clusters. The company leverages its Linux-based EOS and CloudVision software to deliver superior programmability and real-time workload visibility, strengthening its leadership in AI networking. With AI revenues projected at $3.25 billion in 2026, gross margins between 62% and 64%, $10.7 billion in cash as on end of the fourth quarter of 2025, and a $1.6 billion buyback program for 2025, Arista Networks' prospects are bright.
Dell Technologies (DELL - Free Report) is intensifying competition with Cisco through its “AI Factory” initiative, delivering pre-integrated systems that simplify deployment and speed AI adoption. The company shipped $9.5 billion in AI servers in the fourth quarter of fiscal 2026 and commands a $43 billion backlog, highlighting stronger enterprise traction. Leveraging its $100 billion hardware scale and supply-chain dominance, Dell demonstrates procurement strength that positions it as a formidable rival to Cisco in the AI-infrastructure race.
CSCO’s Price Performance, Valuation & Estimates
Shares of Cisco have rallied 15.7% year to date, outpacing the Zacks Computer and Technology sector’s return of 7.6% but underperforming the Zacks Computer – Networking industry’s return of 16.3%.
CSCO’s YTD Price Performance
Image Source: Zacks Investment Research
CSCO appears overvalued, as shares are trading at a forward 12-month price-to-sales ratio of 5.58, which is higher than the industry’s 5.33X. Cisco carries a Value Score of F.
CSCO’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CSCO’s fiscal 2026 earnings is pegged at $4.16 per share, up by a penny over the past 30 days and implying year-over-year growth of 9.19%.
Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
CSCO stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.