By Aniruddha Ganguly
Publication Date: 2026-08-19 16:22:00
Cisco Systems CSCO shares dropped 10% after reporting fourth-quarter fiscal 2026 results on Aug. 12. The decline can be attributed to investor concerns around margin pressure and the quality of forward growth despite very strong top-line results. Revenues increased 18% year over year to $17.3 billion, with product orders jumping 35%. Non-GAAP earnings increased 23% year over year to $1.22 per share. However, non-GAAP gross margin fell 210 basis points (bps) year over year to 66.3%, and product gross margin declined 270 bps to 64.8%, reflecting a higher hardware mix and rising memory costs.
Cisco expects first-quarter fiscal 2027 gross margin in the 65-66% range and acknowledged that the rapid growth of hardware-heavy AI and networking businesses is likely to remain a gross-margin headwind through fiscal 2027. Management also implied growth of roughly 13% between fiscal second and fourth quarters. Recurring indicators were comparatively softer, with Annual Recurring…
