Cisco (NASDAQ:CSCO) stock surged 13.5% on Thursday after the networking giant delivered stronger-than-expected fiscal third-quarter results, raised its full-year outlook, and highlighted accelerating demand tied to the ongoing AI infrastructure buildout. Investors also appeared encouraged by Cisco’s rapidly expanding hyperscaler business, as the company continues benefiting from massive spending on AI data centers and networking equipment.
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In the quarter, Cisco generated revenue of $15.84 billion, up 11.9% year-over-year and about $280 million ahead of consensus estimates, while non-GAAP EPS of $1.06 topped expectations by $0.02. The company also delivered a strong update around AI infrastructure demand, with Service Provider and Cloud orders surging 105% year-over-year alongside triple-digit growth across all five leading hyperscalers. Networking revenue climbed to $8.8 billion, rising 25% annually, while enterprise campus demand improved as customers expanded infrastructure capacity for inference workloads, AI agents, and security applications.
AI orders reached $1.9 billion during the quarter, bringing the year-to-date total to $5.3 billion. Management raised its FY26 AI order outlook to $9 billion from $5 billion previously, while also lifting expectations for FY26 hyperscaler AI revenue to $4 billion from $3 billion. The company additionally suggested that this figure could climb toward $6 billion in FY27.
Looking ahead, Cisco projected fiscal Q4 revenue between $16.7 billion and $16.9 billion, well above consensus expectations of $15.82 billion, alongside non-GAAP EPS guidance of $1.16 to $1.18 versus the Street’s forecast of $1.07.
Rosenblatt’s Mike Genovese, an analyst who ranks among the top 1% on Wall Street, came away encouraged by the results and outlook. With Cisco’s fiscal Q4 guidance implying about 15% year-over-year revenue growth, Genovese argued it now “seems likely Cisco is now a double-digit growth company,” especially as that trend has persisted over the past two quarters.
As for negatives, gross margins contracted by 150 basis points sequentially to 66%, although that was broadly in line with expectations and primarily due to higher component costs, with management noting levels have now stabilized. Genovese points out that even if additional pressure emerges from a higher hyperscaler mix or rising input costs, the company has “other levers” to keep operating margins above 34%.
“Cisco had a strongly bullish 3Q26 reminding us it also participates in the AI industrial revolution through scale across and scale out Optical products from the Acacia acquisition, and scale out Ethernet systems where it designs the chips and is tight with TSMC,” the 5-star analyst summed up.
All of that prompted Genovese to raise his price target on CSCO from $100 to a Street-high $150, while maintaining a Buy rating. The new target implies potential upside of ~30% over the next 12 months. (To watch Genovese’s track record, click here)
The Street’s average price target comes in lower at $124.54, implying potential upside of ~8% from current levels. All told, based on a mix of 11 Buys and 6 Holds, the analyst consensus rates the stock a Moderate Buy. (See CSCO stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.