Cisco reported its Q1 earnings on November 12.
During the earnings call, Chuck Robbins, chairman and CEO of Cisco, said:
“Cisco’s strong start to fiscal 2026 is a testament to the critical role of secure networking and the strength of our portfolio as organizations look to deploy AI across their businesses. That said, we know many customers still have a lot of work to do to ensure they have the modern, scalable, secure networking infrastructure to support their AI goals.”
Robbins also continued, noting the acceleration of growth:
Here are the Cisco Q1 earnings highlights:
- Total revenue increased 8% to $14.9 billion year over year.
- Total gross margin was 65.5% compared to 65.9% in the Q1 of fiscal 2025.
- Operating income was $3.4 billion, up 43%, YoY.
- Net income increased 5% to $2.9 billion.
- Diluted Earnings per Share (EPS) increased 6% to $0.72.
The company provided an outlook for Q2/full year fiscal 2026:
- Q2 revenue in the range of $15.0 billion to 15.2 billion
- Q2 EPS in the range of $0.69 to $0.74
- Full-year 2026 revenue in the range of $60.2 billion to $61.0 billion
Strong earnings results sent the stock soaring, and it was trading 4.6% higher near $77.4 at the time of writing.
Lev Radin/Shutterstock
Bank of America raises Cisco stock price target
Following the release of the earnings, Bank of America analyst Tal Liani and his team updated their opinions on Cisco (CSCO) stock.
Analysts said that AI and Campus product strength drove an increase to Cisco’s 2026 revenue growth guidance, now at 7% versus the Street’s 5.3%, but security disappointed again, being down 2% YoY.
They noted that Cisco’s management attributes the weak results of the security business segment to higher ratable revenues at Splunk’s security. However, Liani’s team believes that with five new platforms and a recent refresh of all Firewall products, the ongoing weakness is more fundamental than merely a timing issue.
The team wrote: “The company is positioned to benefit from the Campus refresh and AI cycle, especially as AI expands to Enterprise environments.”
In a research note shared with TheStreet, Liani reiterated a buy rating and raised the price target for CSCO stock from $85 to $95, based on roughly 21 multiple his estimate for the enterprise-value to free-cash-flow ratio for calendar year 2027.
Analysts noted downside risks for Cisco:
- Deterioration in the spending environment
- Lack of growth in public spending
- Downside risk to gross margin, stemming from pricing and competitive pressures
- Technological changes that would adversely impact high profit switching and routing segments
- Inability to drive technological innovation in its core
- Change in customer behavior that would result in revenue pressure
Upside risks:
- Higher-than-expected growth in key markets, particularly switching and routing
- Solid market share gains in security and observability
Cisco’s recent activity
Cisco announced the launch of Cisco IQ, an AI-powered platform that offers real-time insights, on-demand assessments, troubleshooting, personalized learning, and automation.
According to the company, the new platform enables customers to plan, deploy, manage, secure, and optimize their technology investments more efficiently.
“Cisco IQ is our boldest step yet in reimagining how customers interact with Cisco — from planning and design to optimization and transformation,” said Liz Centoni, EVP and chief customer experience officer.
More Tech Stocks:
- As Palantir rolls on, rivals are worth a second look
- Nvidia’s next big thing could be flying cars
- Cathie Wood sells $21.4 million of surging AI stocks
The company also announced Cisco Unified Edge, an integrated computing platform for distributed AI workloads. The platform aims to bring together compute, networking, storage, and security closer to the data for real-time AI inferencing and agentic workloads.
“Today’s infrastructure can’t meet the demands of powering AI at scale,” said Cisco Chief Product Officer Jeetu Patel. “As AI agents and experiences proliferate, they will naturally emerge closer to where customers interact and decisions are made – the branch office, retail store, factory floor, stadium, and more. That’s where compute needs to live. With our Unified Edge, we’re making it easier to power AI in the real world with flexible, secure systems that are simple to deploy, operate, and scale as demand grows.”
Cisco unveiled its N9100 series of network switches, the first Nvidia partner-developed data center switches based on Nvidia Spectrum-X Ethernet switch silicon. This new series of switches enables Cisco to offer an Nvidia Cloud Partner-compliant reference architecture for neocloud and sovereign cloud deployments.
“We’re at the beginning of the largest data center build-out in history,” said Patel. “The infrastructure that will power the agentic AI applications and innovation of the future requires new architectures designed to overcome today’s constraints in power, computing, and network performance. Together, Cisco and Nvidia are leading the way in defining the technologies that will power these AI-ready data centers in all their varieties, from emerging neoclouds, to global service providers, to enterprises, and beyond.”
Related: Bank of America resets price target as CoreWeave earnings send stock reeling
#Bank #America #resets #Cisco #price #target #earnings