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What's in Store for These 3 Networking Stocks This Earnings Season?
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Key Takeaways
Cisco's Q1 revenues are projected to rise 21.5%, fueled by AI infrastructure, hyperscaler demand and optics.
RADCOM faces a projected 28.8% revenue decline amid deployment delays.
Digi International's Q4 revenues are expected to grow 22.8%, supported by IoT demand and recurring revenues.
Increasing investments in enterprise digitalization, AI-led network upgrades, higher demand for cloud computing, big data, network security and next-generation connectivity solutions are reshaping the outlook for participants in the Zacks Computer - Networking industry.
The proliferation of AI workloads and hyperscale data centers is accelerating investments in high-speed interconnects, optical networking and Ethernet switches. With the explosive growth in data traffic, demand for advanced routing, switching and network optimization solutions is expected to remain strong.
Further, growing deployments of fiber networks, Wi-Fi 7 and secure networking solutions are expanding the addressable market. AI workloads require a major upgrade to observability infrastructure. There is a greater need for continuous monitoring of hybrid environments and tighter security amid rising attacks. This is likely to favor prospects for prominent industry players.
Nonetheless, cautious IT spending amid heightened uncertainty over global macroeconomic conditions and volatile supply-chain dynamics due to tariff troubles continues to be concerning for the participants.
The Computer Networking industry is housed within the broader Zacks Computer and Technology sector. For the third quarter of 2026, the tech sector’s earnings are expected to be up 45.4% as per the latest Earnings Preview report
A few major networking companies are scheduled to report their quarterly results in the coming days. Let's see how things might have shaped up for these players, including Cisco Systems (CSCO - Free Report) , RADCOM Ltd (RDCM - Free Report) and Digi International (DGII - Free Report) , before their announcements.
Networking Stocks to Watch
Cisco is slated to report first-quarter fiscal 2027 results on Nov. 12, after the closing bell. In the last reported quarter, the company’s non-GAAP earnings per share beat the Zacks Consensus Estimate by 4.3%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal first-quarter revenues sits at $18.09 billion, up 21.5%. It generated revenues of $14.88 billion in the prior-year quarter. The consensus mark for earnings is currently pinned at $1.33 per share, indicating an increase of 33% from the year-ago quarter.
For the first quarter of fiscal 2027, Cisco expects revenues between $18 billion and $18.2 billion. Non-GAAP earnings are projected between $1.32 and $1.34 per share.
Cisco’s fiscal first-quarter performance is likely to have benefited from demand for AI Infrastructure solutions, with hyperscaler demand acting as a key catalyst. In the last reported quarter, hyperscaler AI infrastructure orders totaled $4 billion, taking fiscal 2026 orders to $9.3 billion, roughly 4.5 times the fiscal 2025 level. Strong demand for its Silicon One based systems and Acacia optical networking solutions is expected to support growth. Fiscal 2026 hyperscaler AI orders were about 60% Silicon One-based systems and 40% optics. Acacia generated more than $1 billion in orders in the fiscal fourth quarter.
On the last earnings call, CSCO noted that accelerating agentic AI is driving a “networking super cycle” resulting in increasing demand for its Networking stack to support inferencing across cloud, on-premise and edge environments. Acacia business has also been witnessing strong growth as hyperscalers deploy both 400G and 800G coherent optics.
Security revenues grew 14% in the fiscal fourth quarter, supported by Splunk, network security and SASE solutions. Management expects security revenues to grow in the mid-to-high single digits in the fiscal first quarter.
Higher hardware mix and elevated memory costs are likely to have pressured margins. Cisco's fiscal fourth-quarter non-GAAP gross margin contracted 210 basis points year over year to 66.3%. For fiscal first quarter, management anticipates a non-GAAP gross margin of 65-66% and a non-GAAP operating margin of 35.5-36.5%.
However, our proven model does not conclusively predict an earnings beat for Cisco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
RADCOM is scheduled to report third-quarter 2026 results on Nov. 11, before the market opening. In the last reported quarter, the company reported a non-GAAP loss of 9 cents versus the Zacks Consensus Estimate of earnings of 20 cents.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for third-quarter revenues sits at $13.1 million, down 28.8%. It generated revenues of $18.4 million in the prior-year quarter. The consensus mark for earnings currently sits at 6 cents per share, indicating a decline of 79.3% from the year-ago quarter.
RADCOM's third-quarter performance is likely to have benefited from the continued demand for AI-driven network assurance, 5G infrastructure monitoring and cloud-native network automation solutions. However, delays in customer deployments, stemming from rising server infrastructure costs and supply constraints, are likely to have weighed on revenue growth.
Management has not provided specific third-quarter guidance. For 2026, RADCOM reaffirmed its revised revenue guidance of $57 million to $63 million, with a midpoint of $60 million. The company expects to remain profitable on a non-GAAP basis for the full year and generate positive free cash flow in the second half of 2026.
RDCM has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold).
Digi International is scheduled to report fourth-quarter fiscal 2026 results on Nov. 11, after the market close. In the last reported quarter, the company reported adjusted earnings of 75 cents per share, higher than the Zacks Consensus Estimate of 67 cents.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal fourth-quarter revenues sits at $140.4 million, up 22.8%. It generated revenues of $114.3 million in the prior-year quarter. The consensus mark for the bottom line is currently pinned at 76 cents, compared with 56 cents in the year-ago quarter.
For the fourth quarter of fiscal 2026, Digi International expects revenues between $138 million and $142 million. Adjusted EBITDA is projected between $40 million and $41.5 million, while adjusted earnings are anticipated between 75 cents and 78 cents per share.
For fiscal 2026, management raised its revenue guidance to $529-$533 million and adjusted EBITDA outlook to $146-$147.5 million. Adjusted earnings are projected between $2.67 and $2.70 per share, while annual recurring revenues are expected to grow at least 27% year over year.
DGII’s performance is likely to have benefited from increasing demand for connected-device management, data center infrastructure and software-driven IoT solutions. Strong performance across Opengear, Ventus and SmartSense, alongside increasing software attachment rates, is likely to have supported recurring revenues.
However, on the last earnings call, management highlighted challenges in the supply chain.
Digi continues to pursue strategic acquisitions, which are likely to supplement organic growth. The proposed acquisition of Disruptive Technologies, as announced in October, is expected to expand the capabilities and reach of its SmartSense platform. The company expects the transaction to contribute approximately $9 million in additional adjusted EBITDA and free cash flow in fiscal 2028. The transaction is expected to close before the end of 2026, subject to regulatory approval.
DGII has an Earnings ESP of 0.00% and a Zacks Rank #3.
View the Zacks #1 Rank List
Image: Bigstock
What's in Store for These 3 Networking Stocks This Earnings Season?
Key Takeaways
Increasing investments in enterprise digitalization, AI-led network upgrades, higher demand for cloud computing, big data, network security and next-generation connectivity solutions are reshaping the outlook for participants in the Zacks Computer - Networking industry.
The proliferation of AI workloads and hyperscale data centers is accelerating investments in high-speed interconnects, optical networking and Ethernet switches. With the explosive growth in data traffic, demand for advanced routing, switching and network optimization solutions is expected to remain strong.
Further, growing deployments of fiber networks, Wi-Fi 7 and secure networking solutions are expanding the addressable market. AI workloads require a major upgrade to observability infrastructure. There is a greater need for continuous monitoring of hybrid environments and tighter security amid rising attacks. This is likely to favor prospects for prominent industry players.
Nonetheless, cautious IT spending amid heightened uncertainty over global macroeconomic conditions and volatile supply-chain dynamics due to tariff troubles continues to be concerning for the participants.
The Computer Networking industry is housed within the broader Zacks Computer and Technology sector. For the third quarter of 2026, the tech sector’s earnings are expected to be up 45.4% as per the latest Earnings Preview report
A few major networking companies are scheduled to report their quarterly results in the coming days. Let's see how things might have shaped up for these players, including Cisco Systems (CSCO - Free Report) , RADCOM Ltd (RDCM - Free Report) and Digi International (DGII - Free Report) , before their announcements.
Networking Stocks to Watch
Cisco is slated to report first-quarter fiscal 2027 results on Nov. 12, after the closing bell. In the last reported quarter, the company’s non-GAAP earnings per share beat the Zacks Consensus Estimate by 4.3%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal first-quarter revenues sits at $18.09 billion, up 21.5%. It generated revenues of $14.88 billion in the prior-year quarter. The consensus mark for earnings is currently pinned at $1.33 per share, indicating an increase of 33% from the year-ago quarter.
For the first quarter of fiscal 2027, Cisco expects revenues between $18 billion and $18.2 billion. Non-GAAP earnings are projected between $1.32 and $1.34 per share.
Cisco’s fiscal first-quarter performance is likely to have benefited from demand for AI Infrastructure solutions, with hyperscaler demand acting as a key catalyst. In the last reported quarter, hyperscaler AI infrastructure orders totaled $4 billion, taking fiscal 2026 orders to $9.3 billion, roughly 4.5 times the fiscal 2025 level. Strong demand for its Silicon One based systems and Acacia optical networking solutions is expected to support growth. Fiscal 2026 hyperscaler AI orders were about 60% Silicon One-based systems and 40% optics. Acacia generated more than $1 billion in orders in the fiscal fourth quarter.
On the last earnings call, CSCO noted that accelerating agentic AI is driving a “networking super cycle” resulting in increasing demand for its Networking stack to support inferencing across cloud, on-premise and edge environments. Acacia business has also been witnessing strong growth as hyperscalers deploy both 400G and 800G coherent optics.
Security revenues grew 14% in the fiscal fourth quarter, supported by Splunk, network security and SASE solutions. Management expects security revenues to grow in the mid-to-high single digits in the fiscal first quarter.
Cisco Systems, Inc. Price and EPS Surprise
Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote
Higher hardware mix and elevated memory costs are likely to have pressured margins. Cisco's fiscal fourth-quarter non-GAAP gross margin contracted 210 basis points year over year to 66.3%. For fiscal first quarter, management anticipates a non-GAAP gross margin of 65-66% and a non-GAAP operating margin of 35.5-36.5%.
However, our proven model does not conclusively predict an earnings beat for Cisco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
CSCO has an Earnings ESP of -0.51% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
RADCOM is scheduled to report third-quarter 2026 results on Nov. 11, before the market opening. In the last reported quarter, the company reported a non-GAAP loss of 9 cents versus the Zacks Consensus Estimate of earnings of 20 cents.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for third-quarter revenues sits at $13.1 million, down 28.8%. It generated revenues of $18.4 million in the prior-year quarter. The consensus mark for earnings currently sits at 6 cents per share, indicating a decline of 79.3% from the year-ago quarter.
RADCOM's third-quarter performance is likely to have benefited from the continued demand for AI-driven network assurance, 5G infrastructure monitoring and cloud-native network automation solutions. However, delays in customer deployments, stemming from rising server infrastructure costs and supply constraints, are likely to have weighed on revenue growth.
Management has not provided specific third-quarter guidance. For 2026, RADCOM reaffirmed its revised revenue guidance of $57 million to $63 million, with a midpoint of $60 million. The company expects to remain profitable on a non-GAAP basis for the full year and generate positive free cash flow in the second half of 2026.
Radcom Ltd. Price and EPS Surprise
Radcom Ltd. price-eps-surprise | Radcom Ltd. Quote
RDCM has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold).
Digi International is scheduled to report fourth-quarter fiscal 2026 results on Nov. 11, after the market close. In the last reported quarter, the company reported adjusted earnings of 75 cents per share, higher than the Zacks Consensus Estimate of 67 cents.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal fourth-quarter revenues sits at $140.4 million, up 22.8%. It generated revenues of $114.3 million in the prior-year quarter. The consensus mark for the bottom line is currently pinned at 76 cents, compared with 56 cents in the year-ago quarter.
For the fourth quarter of fiscal 2026, Digi International expects revenues between $138 million and $142 million. Adjusted EBITDA is projected between $40 million and $41.5 million, while adjusted earnings are anticipated between 75 cents and 78 cents per share.
For fiscal 2026, management raised its revenue guidance to $529-$533 million and adjusted EBITDA outlook to $146-$147.5 million. Adjusted earnings are projected between $2.67 and $2.70 per share, while annual recurring revenues are expected to grow at least 27% year over year.
DGII’s performance is likely to have benefited from increasing demand for connected-device management, data center infrastructure and software-driven IoT solutions. Strong performance across Opengear, Ventus and SmartSense, alongside increasing software attachment rates, is likely to have supported recurring revenues.
However, on the last earnings call, management highlighted challenges in the supply chain.
Digi International Inc. Price and EPS Surprise
Digi International Inc. price-eps-surprise | Digi International Inc. Quote
Digi continues to pursue strategic acquisitions, which are likely to supplement organic growth. The proposed acquisition of Disruptive Technologies, as announced in October, is expected to expand the capabilities and reach of its SmartSense platform. The company expects the transaction to contribute approximately $9 million in additional adjusted EBITDA and free cash flow in fiscal 2028. The transaction is expected to close before the end of 2026, subject to regulatory approval.
DGII has an Earnings ESP of 0.00% and a Zacks Rank #3.