Cisco Systems Stock Rose On More Than Its AI Orders

Cisco Systems (CSCO) stock has returned about 64% over the past year, against roughly 21% for the S&P 500. The easy explanation is that Cisco sells the switches and optics that hyperscalers are buying for AI. That business is real, and it is the smaller part of the story. The larger part is that the rest of Cisco started growing again, much of it as customers ready their networks for AI.

Cisco’s AI Revenue Was Six Cents Of Every Dollar

AI infrastructure for hyperscalers made up about 6% of revenue in fiscal 2026, up from less than 2% in fiscal 2025. Orders run ahead of that. Cisco took $9.3 billion of AI orders from hyperscalers across fiscal 2026, and management expects $7.5 billion of AI infrastructure revenue in fiscal 2027.

Set against $63.3 billion of trailing twelve-month revenue, that is a fast-growing slice of the company rather than its engine. Going from under 2% of revenue to about 6% supplied more than half of the year’s above-trend growth, a smaller business punching above its weight, though not yet the majority of total revenue.

And Cisco’s Older Businesses Started Growing Again

Revenue grew 11.8% over the trailing twelve months, against a three-year average of 3.8%. That gap is what the market repriced. A low-single-digit grower turned in a double-digit year.

Campus gear was a big part of it. Switching, routing, and wireless are all in refresh at once, which management says has not happened before, and by fiscal Q4 2026 campus networking product orders were growing 20% year over year. Wi-Fi 7 made up more than half of wireless orders in that quarter.

Some of it came from price. Increases in hardware added about five points to the 18% revenue growth Cisco reported in fiscal Q4 2026, and management says they are aimed at the products that use the most memory, where its own costs have risen. Its engineers cut the memory its Wi-Fi 7 gear needs by half, and management says it passes on only what it has to, so less of that cost reaches the price list.

So Can Cisco Keep Growing Like This?

Management has guided fiscal 2027 revenue growth of roughly 15%. Strip out the $7.5 billion of hyperscale AI revenue and the CFO puts the rest of the business near 10%. That is what the stock is carrying.

Shipping this much hardware shifts the mix, and management expects gross margin to sit below the 66.3% non-GAAP margin of fiscal Q4 2026 as fiscal 2027 runs on, while still guiding non-GAAP operating margin near 35% for the year, which would be a company high. Cisco is trading gross margin for revenue and keeping the operating margin, because winning hyperscale business adds little expense.

The market is not treating that as settled. At $108.61, the stock sits about 16% below its 52-week high of $129.52, and growth implied for fiscal Q2 through Q4 2027 is nearer 13% against a much harder second-half comparison, even as pricing, a full-year 4 to 5 points, weighted more toward the first half, keeps working in Cisco’s favor. Watch whether the guide keeps rising instead of merely holding.

Will You Take This Apart Again On The Next One?

You now know what carried this stock, and getting there took a quarter’s worth of reading. The next name that moves will have a different cause and the same pile of work waiting behind it.

There is a way to stop doing this one stock at a time. Since its inception, our rule-based High Quality Portfolio has outperformed its benchmark, a blend of three major indices.

Or keep judging them yourself, and our Guidance-Driven Momentum screen is where to start. Knowing why a stock climbed is not the same as knowing whose forecasts are still going up.