- Cisco shares slide 9% despite beating analyst expectations and issuing stronger-than-expected guidance.
- Piper Sandler analysts noted the guidance is conservative and warned that some investors "may start to nitpick that we're seeing peak growth."
- CEO Chuck Robbins stated that Cisco had "a record year" and "a record quarter," explaining the conservative guidance as a prudent start to the new fiscal year.
- KeyBanc Capital Markets remains bullish on Cisco, expecting market share gains as hyperscalers increase capital expenditures.
- Despite solid guidance with about 15% revenue growth projected for this year, analysts expect sales growth to dip back into single digits next fiscal year.
- Hyperscalers placed $4 billion in infrastructure orders in the quarter, bringing the fiscal-year total to $9.3 billion, with Cisco expecting that revenue to nearly double to $7.5 billion in fiscal 2027.
Cisco shares dropped 9% on Thursday, despite reporting better-than-expected earnings and strong guidance. The company’s fiscal fourth-quarter revenue increased 18% to $17.3 billion, exceeding analysts' expectations of $16.8 billion.
Cisco's guidance for the current quarter is projected between $18 billion and $18.2 billion, which also tops the average estimate of $16.8 billion according to LSEG. However, analysts at Piper Sandler noted that while Cisco's numbers were solid, the guidance appears conservative given the current demand environment. They expressed concerns that some investors might perceive this as a sign of peak growth.
Heading into earnings, Cisco shares had risen over 60% for the year, benefiting from the artificial intelligence boom. Despite a solid forecast projecting 15% revenue growth for the upcoming year, analysts predict a dip in sales growth back into single digits for the next fiscal year.5
Cisco CEO Chuck Robbins stated, “We had a record year, we had a record quarter,” emphasizing the company’s strong market position. He added, “But it's also a time that we're going to start the year being a little bit prudent.” Analysts at KeyBanc Capital Markets remain optimistic, maintaining a buy rating, citing potential market share gains as hyperscalers increase capital expenditures.346
Hyperscalers accounted for $4 billion of revenue in the past fiscal year, with expectations to nearly double to $7.5 billion by fiscal 2027.
“Piper Sandler analysts said Cisco's guidance "looks conservative given the current demand environment," and some investors "may start to nitpick that we're seeing peak growth." CEO Chuck Robbins told CNBC's Jim Cramer the company had "a record year" and "a record quarter," but is "going to start the year being a little bit prudent."”
CNBC
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