Dive Brief:
- Cisco tapped into enterprise demand for high-capacity networking to build out on-premises AI infrastructure. The tech vendor saw its fiscal year 2026 revenue soar to record levels, executives said during a Wednesday earnings call, with year-over-year revenue increasing 12% to $63.3 billion during the twelve months ended July 25.
- “We are in a multiyear, multibillion-dollar networking super cycle,” Chairman and CEO Chuck Robbins told investors. “As customers look to manage increasing traffic and costs, they are investing in Cisco's networking stack for inferencing across cloud, on-premise and edge environments.”
- The company managed to keep component price hikes largely in check despite ongoing memory and storage chip shortages, according to Robbins. “The price increases that we've done have been single digit,” he said. “We're doing everything we can to secure the right supply at the right prices and build up strategic inventory where needed and advance purchase commitments.”
Dive Insight:
Cisco reaped the rewards of an AI-fueled hyperscaler infrastructure boom this year. The company booked $4 billion in orders from cloud providers in Q4, which pushed the fiscal year total to $9.3 billion — a 350% increase over the prior year.
The enterprise market, which is where channel partners do the bulk of their infrastructure business, provided an additional boost as AI deployments expanded in cloud and on-premises.
“We see customers investing in infrastructure across their environments,” Robbins said. “If they continue to use cloud-based models, that's good for us, just like it has been for the last two years. If they move to open-weight models or models that they're running on-prem, that's great for us because it means they will invest in more enterprise private data center networking, which we've seen in the last two quarters.”
Component prices are expected to moderate as global spending on data center gear reaches $1.8 trillion by 2030, according to Dell’Oro Group market research. Network architecture is changing to support AI inference and agentic workloads, which have requirements that differ from model training, the analyst firm said in a separate report.
The AI hardware refresh is also amplified by heightened security and resilience concerns.
“Enterprises are focusing on security audits and IT equipment replacement, after reports of rogue AI agents hacking firms have heightened fears of breaches,” Siân Morgan, senior director at Dell’Oro Group, said in an Aug. 6 report.
Security is baked into Cisco’s strategy.
The company completed its acquisition of agentic AI security platform Astrix Security in June and further bolstered its cyber defense capabilities with the development of the Antares family of security-focused small language models. The first two Antares models models were released via Hugging Face last month.
“On the question relative to the enterprise and this whole discussion of on-prem and cloud, is it a cost issue, a security issue, a sovereignty issue? The answer is yes,” Robbins said.
