Cisco Systems delivered a Q3 FY2026 earnings report on May 13 that blew past Wall Street estimates on every metric, sending shares surging 17% in after-hours trading to approximately $72. Revenue jumped 15% year-over-year to $15.2 billion, driven by explosive demand for AI networking infrastructure, while adjusted EPS of $1.05 beat consensus by $0.12.
CEO Chuck Robbins declared that Cisco is 'at the epicenter of the AI infrastructure buildout,' pointing to AI-related orders that have reached a $9 billion annual run rate -- triple the level from just 12 months ago. The company raised its full-year revenue guidance by $1.2 billion and announced 4,000 job cuts to accelerate its pivot toward AI-centric product lines.
What happened
Cisco's Q3 FY2026 results were a blowout by any measure. Revenue of $15.2 billion topped the $14.1 billion consensus estimate by nearly 8%, while adjusted EPS of $1.05 beat the $0.93 estimate by $0.12. Product revenue surged 19% to $8.9 billion, led by a 47% increase in data center switching and routing gear specifically designed for AI workloads. Services revenue grew 8% to $6.3 billion. The AI infrastructure order backlog reached $9 billion on an annual run rate basis, up from $3 billion a year ago. Gross margins expanded 180 basis points to 67.2% as the higher-margin AI products shifted the revenue mix favorably. Robbins also announced 4,000 layoffs to fund increased R&D spending on AI-specific silicon.
Why it matters
Cisco's results validate the thesis that AI infrastructure spending is broadening beyond GPU makers like NVIDIA to encompass the entire data center ecosystem. Networking is the critical bottleneck in scaling AI clusters -- you can have all the GPUs in the world, but if the interconnect fabric cannot move data fast enough, utilization plummets. Cisco's 47% growth in data center switching revenue proves that enterprises and hyperscalers are investing heavily in this layer of the stack.
Market impact
CSCO surged 17% to approximately $72 in after-hours trading, adding roughly $45 billion to Cisco's market capitalization, pushing it toward $310 billion. Arista Networks (