Cisco has officially shed its dot-com-era image, as shares soared 18% in premarket trading Thursday after it beat third-quarter expectations and reported strong demand for AI infrastructure. Here’s what the numbers show, and why this might be the start of a larger story for Cisco investors.
Cisco reported adjusted earnings of $1.06 per share on $15.8 billion in revenue, beating analyst expectations of $1.03 per share and $15.6 billion in revenue. Building on this momentum, the company provided strong guidance for the fourth quarter, projecting earnings of $1.16 to $1.18 per share on revenue of $16.7 billion to $16.9 billion. Analysts had expected $1.08 per share on $15.8 billion in revenue.
A major driver behind the stock’s jump was AI orders. So far this fiscal year, Cisco has received $5.3 billion in AI infrastructure orders from hyperscalers and raised its full-year AI order target to $9 billion, up from $5 billion. In addition, networking revenue hit $8.82 billion, beating Wall Street’s forecast of $8.44 billion as hyperscalers continue to invest in AI hardware.
That rise in AI demand has caught analysts’ attention. For example, Melius Research has a Buy rating and a $145 price target for Cisco. Their analyst compared today’s AI growth to the internet infrastructure boom of the 1990s. The firm believes Cisco’s investments in silicon and optics are starting to pay off in ways many investors have yet to notice.
Meanwhile, gross margins were 66%, slightly below the 66.2% consensus and down from 68.6% last year. This drop matches industry-wide cost pressures, especially from higher memory costs. Cisco’s chief financial officer said the company is taking steps to manage these costs, and margins are now stabilizing.
In the context of financial performance, Cisco also announced layoffs of less than 5% of its workforce as part of a restructuring effort. The cuts add to a growing wave of tech-sector job reductions in 2026, with more than 103,000 tech employees laid off so far this year, according to the tracking website Layoffs.fyi, bringing the total to within 1,000 of the full-year 2025 total of 124,201.
With all these developments, Cisco’s stock has gained more than 30% this year through Wednesday’s close and only recently surpassed its dot-com-era peak, set 25 years ago. Thursday’s move suggests the market is starting to price in something much bigger.
