The trickle-down effect of the AI infrastructure build-out continues to be a boon for Cisco, with the networking firm celebrating better-than-expected results Wednesday, but rising costs appeared to spook investors.

The US company closed out the 2026 financial year with its best results in 30 years, recording $63.3 billion in revenue, up 12% on FY2025, after a 4.5x increase in the value of its hyperscaler orders.

CEO Chuck Robbins told an earnings call, “We believe we’re in the early stages of a networking super cycle, presenting a massive opportunity”, citing high demand from hyperscalers, telcos, and enterprise customers.

But it was continued pressure on its non-GAAP gross profit margins that analysts questioned. CFO Mark Patterson said he expected its gross margin to hover around 65-66% in Q1 after it shrank from 68.7% in FY25 to 66.9% in FY26.

The company’s shares dropped around 6% in pre-market trading at the time of publication.

Data centres need networking

Get the full story: Subscribe for free

Join peers managing over $100 billion in annual IT spend and subscribe to unlock full access to The Stack’s analysis and events.

Subscribe now

Already a member? Sign in