Will Cisco Systems (CSCO) Deliver the Strong Results the Market Needs to See?

With technology stocks recently coming under pressure amid concerns about lofty AI valuations, potential regulatory scrutiny, and immense infrastructure spending, Cisco Systems CSCO) will be among the most important AI-related companies reporting earnings this week.

While CSCO has not escaped the recent selloff, its strong year-to-date performance underscores investors' renewed enthusiasm for established networking and hardware companies.

Cisco's success highlights how the AI infrastructure buildout has revitalized longstanding technology leaders, including Dell Technologies DELL) and Hewlett Packard Enterprise HPE), whose networking, servers, and computing hardware have become increasingly critical to AI data centers.

With Cisco scheduled to report its fiscal first-quarter results after market hours on Thursday, November 12, expectations are high for another strong quarter.

Cisco's Q1 Expectations

Cisco is expected to report Q1 adjusted earnings of $1.33 per share, representing 33% year-over-year growth from EPS of $1.00 in the prior-year quarter. This comes as Q1 revenue is projected to increase nearly 22% to $18.09 billion from $14.88 billion a year ago.

Momentum has been impressive, with Cisco's fiscal Q4 revenue rising 18% to $17.25 billion and adjusted EPS jumping 23% to $1.22.

More importantly, Cisco is benefiting from accelerating demand for AI networking infrastructure. The company secured $9.3 billion in AI infrastructure orders during fiscal 2026 and expects AI-related revenue from hyperscalers to reach $7.5 billion in its current FY27, up from approximately $4 billion last year.

Investors will be closely watching whether this momentum can support another guidance increase, particularly as growing sales of lower-margin AI networking hardware could pressure overall gross margins.

CSCO Performance & Valuation Comparison

Despite the recent tech selloff, Cisco stock has still gained nearly 30% YTD, comfortably outperforming the benchmark S&P 500 and the Nasdaq's returns of just under 10%.

Over the last three years, CSCO has delivered a total return of more than 100% when including dividends, compared with roughly 80% for the broader indexes.

Image Source: Zacks Investment Research

At current levels of just under $100 a share, CSCO trades at 20X forward earnings, which is roughly on par with its Zacks Computer-Networking Industry average and near the S&P 500's 18X.

This suggests investors aren't paying an excessive premium for Cisco's expanding AI exposure, although its valuation is no longer as inexpensive as it was before the AI infrastructure spending boom. While CSCO trades above its decade-long median of 16X forward earnings, shares are still more than 35% below a high of 32X during this period.