Investment Rating - The report assigns an "Outperform" rating for Cisco, indicating an expected total return over the next 12-18 months that exceeds the relevant market benchmark [21]. Core Insights - Cisco's Q4 FY25 results showed revenue of $14.7 billion, a year-over-year increase of 8%, surpassing expectations of $14.62 billion. Non-GAAP net income reached $4.0 billion, up 12% year-over-year, with non-GAAP EPS at $0.99, a 14% increase [1][8]. - The growth was primarily driven by strong demand for AI infrastructure and network upgrades, alongside several AI-oriented product launches. Cisco's competitive position in networking and AI has been further strengthened through strategic partnerships and continuous innovation [1][8]. - For the full fiscal year 2025, Cisco reported total revenue of $56.7 billion, reflecting a 5% year-over-year growth [1][8]. Summary by Sections AI Infrastructure - AI infrastructure has emerged as a significant growth driver, with web-scale customer orders exceeding $800 million in Q4, leading to cumulative orders of over $2 billion for FY25, far surpassing the initial target of $1 billion. Approximately $1 billion of revenue related to these AI orders was recognized in FY25, indicating effective order-to-revenue conversion [2][9]. - Orders from service providers and cloud customers surged by 49% year-over-year, with web-scale customers achieving triple-digit order growth for four consecutive quarters, highlighting persistent demand [2][9]. Networking Segment - The networking segment experienced a 12% year-over-year revenue growth in Q4, with double-digit order growth recorded for four consecutive quarters. Newly launched products, such as the Catalyst 9K smart switches, are positioned to create AI-ready networks [3][10]. - The adoption of Wi-Fi 7 products has accelerated significantly, showing triple-digit year-over-year growth. Additionally, ruggedized Catalyst devices for industrial IoT have maintained double-digit order growth for five consecutive quarters, benefiting from local investments in manufacturing and critical infrastructure [3][10]. Security and Software - The security segment saw a 9% year-over-year revenue increase in Q4, driven by new and upgraded security products. The integration with Splunk has begun to yield synergies, with new customer acquisitions growing by approximately 14% year-over-year [4][11]. - The shift towards software and subscription services continues, with rising RPO and ARR, enhancing revenue visibility for FY26. Services revenue remained stable, with expectations for gradual recovery in FY26 [4][11]. FY26 Outlook - Management projects mid-single-digit revenue growth and a solid non-GAAP EPS range for FY26, supported by three core drivers: the AI strategy encompassing web-scale training back-end, enterprise inference/cloud, and network connectivity [5][12]. - The campus network refresh cycle and integrated security solutions are expected to support a recovery in enterprise IT spending. The ongoing transition to subscription and software models, along with Splunk synergies, will further enhance revenue predictability and profit structure [5][12][13].