Cisco Surpasses Q2 Estimates with AI Momentum, Yet Shares Stumble

2026-02-12 companies

San Jose, Wednesday, 11 February 2026.
Despite beating Wall Street estimates with $15.3 billion in revenue and securing $2.1 billion in AI infrastructure orders, Cisco shares slipped. The market’s counterintuitive reaction signals that investor focus has shifted from current operational beats to broader valuation concerns within the hardware sector.

Fiscal Q2 Performance: Beating Expectations

Cisco Systems (CSCO) reported its fiscal second-quarter results on the evening of February 10, 2026, delivering figures that surpassed Wall Street’s forecasts [2]. The networking giant posted adjusted earnings per share of $1.04, beating the analyst consensus of $1.02 [2]. Revenue for the quarter reached $15.3 billion, exceeding the expected $15.11 billion and representing a 10% increase year-over-year [2][8]. Despite these solid headline numbers, the market reaction was tepid; shares closed at $85.54 on February 10 before slipping approximately 5.41% to $80.91 in extended trading [5]. This decline followed a run-up in the stock price, which had hit all-time highs just a day prior on February 9 [8].

Segment Analysis: Networking Surges, Security Lags

The company’s growth engine for the quarter was undoubtedly its core infrastructure business. Networking segment revenue surged 21%, supported by a notable increase in demand [8]. specifically, networking product orders grew by more than 20%, contributing to an overall 18% rise in total product orders year-over-year [2]. However, this operational success was not uniform across all divisions. The Security segment experienced a contraction, declining 4% to $2.0 billion [8]. Additionally, the company’s liquidity metrics showed some strain, with operating cash flow decreasing by 19% year-over-year to $1.8 billion [8].

AI Infrastructure and Strategic Pivots

A central element of Cisco’s current strategy involves its aggressive pivot toward artificial intelligence infrastructure. During the quarter, the company secured $2.1 billion in AI infrastructure orders, signaling strong traction in this high-growth vertical [8]. This momentum aligns with recent strategic product launches, including the Silicon One G300 switching chip and new data center systems designed to support AI workloads [6]. By integrating these high-performance hardware solutions with its broader portfolio, Cisco aims to position itself as a comprehensive infrastructure provider for the AI era [6]. The company also continued its shareholder return program, distributing $3 billion during the quarter through $1.6 billion in dividends and $1.4 billion in share buybacks [2].

Forward Guidance and Market Outlook

Looking ahead, Cisco has updated its financial outlook for the remainder of the fiscal year. The company raised its full-year fiscal 2026 revenue guidance to a range of $61.2 billion to $61.7 billion, with adjusted earnings per share projected between $4.13 and $4.17 [8]. For the current third quarter, management anticipates revenue between $15.4 billion and $15.6 billion [2]. Despite the immediate post-earnings stock dip, the analyst community remains largely optimistic. As of February 10, the consensus rating for Cisco stock was a “Strong Buy” among some analyst groups, with an average price target of $91.30, implying a potential upside of approximately 6.4% from pre-drop levels [2].

Sources

earnings report Cisco Systems