Zhi Tong Cai Jing·2025-11-12 23:24Core Viewpoint - Cisco reported better-than-expected Q1 FY 2026 results, showing progress in capturing AI-related spending, with revenue growth of 8% year-over-year to $14.9 billion, surpassing analyst expectations of $14.8 billion [1][5] Financial Performance - Q1 FY 2026 revenue was $14.9 billion, up from $13.8 billion in Q1 FY 2025, reflecting an 8% increase [3] - Net income for Q1 FY 2026 was $4.0 billion, a 9% increase from $3.7 billion in Q1 FY 2025 [5] - Diluted earnings per share (EPS) for Q1 FY 2026 was $1.00, compared to $0.91 in Q1 FY 2025, marking a 10% increase [5] Business Segmentation - Product revenue increased by 10% year-over-year to $11.08 billion, with networking revenue growing 15% to $7.77 billion [5][6] - Service revenue grew by 2% to $3.81 billion [5] - Specific product performance included a 6% increase in observability revenue, while security and collaboration revenues declined by 2% and 3%, respectively [6] Market Position and Future Outlook - Cisco's stock has risen nearly 40% over the past 12 months, driven by strong sales, stable gross margins, and the AI market trend [6] - The company is upgrading chips and network devices to better support AI tasks, competing with Broadcom and HPE [7] - Cisco's AI infrastructure orders from large cloud providers totaled $1.3 billion in Q1 FY 2026, up from $800 million in the previous quarter [7] - The company raised its full-year FY 2026 revenue guidance to $60.2 billion to $61.0 billion, up from a previous estimate of $59.0 billion to $60.0 billion [7] - For Q2 FY 2026, Cisco expects revenue between $15.0 billion and $15.2 billion, exceeding analyst expectations [7] Analyst Insights - Analysts suggest that despite the maturity of the networking business, AI and product updates are expected to drive additional sales growth in the coming years [8] - Cisco's demand remains stable, with its networking hardware and software strategy anticipated to support sustainable mid-single-digit growth in FY 2026 [8]