Cisco's Networking Revenue Growth Picks Up: More Upside Ahead?

Core Insights - Cisco Systems' networking revenues increased by 15% year-over-year to $7.77 billion in the first quarter of fiscal 2026, driven by strong demand for AI infrastructure and campus networking solutions [1][9] - The company anticipates a multi-year, multibillion-dollar refresh opportunity in campus networking as demand for next-gen solutions like smart switches and Wi-Fi 7 products grows [2] - Cisco expects to generate over $2 billion from high-performance networking products, supported by strategic partnerships and the launch of the Unified Edge platform [3][9] Networking Revenue Growth - Networking product orders grew in the high teens for the fifth consecutive quarter, indicating robust growth across hyperscale infrastructure, enterprise routing, campus switching, and industrial IoT [2] - The demand for next-gen solutions is expected to drive significant revenue growth in fiscal 2026 [2] Competitive Landscape - Cisco faces strong competition from Arista Networks and Hewlett Packard Enterprise in the networking domain [4] - Arista Networks is gaining traction in high-performance switching products, while Hewlett Packard Enterprise is focusing on AI and IoT to diversify its business [5][6] Stock Performance and Valuation - Cisco shares have appreciated 29.6% year-to-date, outperforming the broader Zacks Computer and Technology sector's return of 23.5% [7] - The stock is trading at a premium with a trailing 12-month price/book ratio of 6.42X compared to the industry average of 6.05X [11] Earnings Estimates - The Zacks Consensus Estimate for the second quarter of fiscal 2026 earnings is $1.01 per share, reflecting a 7.45% growth from the previous year [13]