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

Cisco Systems’ CSCO networking revenues picked up in the first quarter of fiscal 2026 after a decline in fiscal 2025. Revenues from Networking were $7.77 billion, up 15% on a year-over-year basis. The first-quarter fiscal 2026 results benefited from robust demand for AI infrastructure and campus networking solutions. The company’s networking portfolio, powered by Silicon One, AI-native security solutions and operating systems, is expanding CSCO’s AI footprint. 

Campus networking is benefiting from strong demand for next-gen solutions, including smart switches, secure routers and Wi-Fi 7 wireless products, which CSCO expects to be the start of a multi-year, multibillion-dollar refresh opportunity as 4K and 6K switches support ends. Networking product orders grew in the high teens, which marked the fifth consecutive quarter of double-digit growth driven by hyperscale infrastructure, enterprise routing, campus switching, wireless, industrial IoT and servers. This bodes well for Networking revenues in fiscal 2026.

Cisco now expects more than $2 billion from its high-performance networking products across sovereign, Neocloud and enterprise customers. Rich partner base that includes partnerships with G42 and the UAE, including HUMAIN and Stargate UAE, is noteworthy in this regard. The launch of Cisco Unified Edge, an industry-first converged platform for the network edge, integrating compute, networking and storage into a single system, is expected to boost Cisco’s top-line growth.

CSCO Faces Tough Competition in the Networking Domain

Cisco is facing stiff competition from Arista Networks ANET and Hewlett Packard Enterprise HPE in the networking domain. 

Arista Networks holds a leadership position in 100-gigabit Ethernet switches and is increasingly gaining market traction in 200 and 400-gigabit high-performance switching products. The Arista 2.0 strategy is resonating well with customers, as its modern networking platforms are foundational for the transformation from silos to data centers.

Hewlett Packard Enterprise views AI, Industrial Internet of Things (IoT), and distributed computing as the next major markets. The company has invested significantly over the past few years to enhance its capabilities across the aforementioned space. Hewlett Packard Enterprise has linked these businesses to its fast-growing networking business arm, Aruba Networks. The strategy will help Hewlett Packard Enterprise diversify its business from the server and hardware storage markets.

CSCO Share Price Performance, Valuation & Estimates

Cisco shares have appreciated 29.6% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 23.5%.

CSCO Stock Lags Sector

The CSCO stock is trading at a premium, with a trailing 12-month price/book of 6.42X compared with the Zacks Computer Networking industry’s 6.05X. Cisco has a Value Score of D.

CSCO Stock is Overvalued

The Zacks Consensus Estimate for the second quarter of fiscal 2026 earnings is currently pegged at $1.01 per share, up a couple of cents over the past 30 days, suggesting 7.45% growth from the figure reported in the year-ago quarter.  
 

Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote

Cisco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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