Cisco Stock Looks Expensive Until You Price The Year It Already Guided

Cisco Systems (CSCO) trades near $106 a share, about 24.6 times the $4.33 of non-GAAP earnings per share it reported for fiscal 2026. That is the same basis Cisco uses for its guidance and analysts use for their forecasts. For a networking supplier with $63.33 billion of revenue behind it, that is rich. And it ignores the two years analysts have already forecast.

Where Cisco’s Rich Price Came From

Cisco has returned about 59% over the past twelve months and still trades about 18% below its 52-week high. Buyers at 24.6 times are paying for earnings Cisco has not reported yet.

But Cisco Has Already Guided To The First Year

On what analysts expect for fiscal 2027, that same price is about 20.6 times earnings. On the earnings expected for fiscal 2028, it is about 19.1 times.

Both are forecasts. The first one barely is. Analysts put fiscal 2027 earnings at about $5.12 a share, and Cisco guided that year to non-GAAP earnings of $5.05 to $5.11 a share. Consensus sits just above the top of the guide, so the nearer multiple rests on guidance rather than on analyst optimism.

So What Does Cisco Have To Sell To Get There?

The fastest-growing piece is AI infrastructure for hyperscalers, and much of that is already ordered. Cisco took $9.3 billion of those orders across fiscal 2026, about 4.5 times its fiscal 2025 total, about 60% of them Silicon One-based systems and the rest optics. About $4 billion of that order total had already turned into fiscal 2026 revenue. Management projects that business to deliver $7.5 billion of revenue in fiscal 2027.

AI infrastructure for hyperscalers was only about 6% of fiscal 2026 revenue, and management expects the rest of the business to grow about 10% in fiscal 2027 with that AI revenue backed out. The older business is moving as well: campus networking product orders grew 20% year over year in the fourth quarter of fiscal 2026, with switching, routing and wireless all refreshing at the same time.

Shipping that much hardware costs Cisco at the gross line, and it expects a slight gross margin headwind through fiscal 2027. Management points at the operating line instead. Cisco’s fiscal 2027 guide implies a non-GAAP operating margin of about 35%, a company high-water mark, because capturing hyperscaler orders adds almost no expense to what it already spends.

Consensus has revenue growing about 11.2% a year from the last twelve months to fiscal 2028. Between the two forecast years alone, earnings and revenue grow at a similar pace. So the fiscal 2028 multiple does not need Cisco to earn more on each dollar than the fiscal 2027 guide already assumes. It needs Cisco to keep selling.

The soft spot is fiscal 2028, where analyst estimates are more widely spread, and that makes the consensus behind 19.1 times thinner than it looks. The first forecast year rests on Cisco’s own guidance, and only the second still needs an act of faith.

What Believing Cisco’s Second Year Takes

That is what the trailing multiple never weighs. Weighing it takes a view on how long hyperscalers keep ordering, and on what an estimate two years out is worth. Doing that across everything you own is more than most people have time for. Since its inception, our rule-based High Quality Portfolio has outperformed its benchmark, a blend of three major indices. Or try our Forward Valuation Discount screen, which ranks the stocks priced furthest below their forecast earnings. Finding one is easier than being right about it.