Cisco forecasts $9 billion in AI infrastructure revenue in FY27
Network World ·
Cisco continues to benefit from a “ networking supercycle ,” reporting record revenue—driven by demand for AI infrastructure, security, and campus refreshes from hyperscalers and enterprise customers—for its fiscal first quarter ended October 24. “In Q1, we delivered record quarterly revenue of $18.5 billion, up 24% year over year, and record non-GAAP earnings per share of $1.40, up 40% year over year. These are our strongest top and bottom-line growth rates in over 15 years,” Cisco CEO Chuck Robbins said on the vendor’s quarterly financial call. “Networking product orders grew 28% in Q1, delivering our ninth consecutive quarter of double-digit growth. In fact, we saw double-digit growth across every product family: service provider routing, compute, enterprise routing, wireless, data center switching and campus switching,” Robbins said. “These broad-based results support our view that we are in the early stages of a multiyear, multibillion-dollar networking supercycle.” Enterprise product orders were up 15% year-over-year, on top of 4% growth a year ago, with double-digit growth across all geographies and in networking and security, Robbins added. “We continue to see robust demand for our campus networking solutions in Q1 with 14% year-over-year growth in product orders. Our next-generation portfolio continues to ramp faster than prior product launches, and we believe we are still very early in this refresh cycle,” he said. Product orders from service provider and cloud customers continue to be broad-based, growing 47% year-over-year, Robbins said. “Overall, our hyperscaler business continues to show strong momentum with AI infrastructure revenue projected to grow to $9 billion in fiscal year ’27, more than double fiscal year ’26 levels. Hyperscalers are now deploying our scale-across networking architecture and production environments as they extend coordinated AI workloads across data centers.” As for whether or not this growth is sustainable over time, Robbins cited five technology drivers that he said would continue to fuel this multiyear, multi-billion-dollar market opportunity: Hyperscale success: Robbins noted that Cisco had 18 AI design wins in the last 5 quarters. “And obviously, we raised the AI guidance to $9 billion, more than double what it was last year. So, that’s the first that we expect to continue.” Campus refresh : Campus network refresh and modernization has seen double-digit order growth over multiple quarters. “We’re still in the very early stages, less than 10% on the transition,” Robbins said. Mythos: “Somewhat connected to that, but more broad, is the post-Mythos opportunity. We’re beginning to hear customers that are attributing orders to early Mythos implications. We heard it in Europe as an example, with service providers relative to the managed services CPE that they’re needing to upgrade for their customers…. And while customers want to move fast, they want to do this right. So, they’re taking the appropriate time to plan, to design the right architecture, because they know if they’re going to go through doing this, they got to get the architecture exactly right.” Sovereignty: “We all know that countries around the world, beginning in Europe, are looking for infrastructure that they feel like they have operational control over. And we are fortunate that we’re one of the few companies that has maintained a robust on-premise portfolio. So, we’re able to deliver. We announced a year ago Sovereign Critical Infrastructure for Europe. We expanded and launched it for Canada. I recently preannounced it in India, and we’ll continue to roll it out around the world. In addition, the work we’re doing with the sovereign cloud providers like Humai, G42 and other sovereign nations continues to grow.” The hybrid data center: “So, our enterprise customers will be running AI applications in the cloud, but they’re also investing heavily in private data centers. They want to run open weight and open-source models in their own data center. They want to train on their own data in their own data centers. And that’s why we’ve seen 9 out of the last 11 quarters; we’ve seen double-digit order growth in our enterprise data center networking business,” Robbins said. Security also has been playing a big role in Cisco’s recent successes as this quarter its core security wares—aside from Splunk—grew 15%, which is the best it’s been in three years, Robbins said. Orders for firewalls, for example, grew more than 30% for the third consecutive quarter. “Then there’s our zero-trust secure access portfolio [which includes its Duo, Secure Access, Identity Services Engine and other products]. This is a portfolio that didn’t exist three years ago. We now have 5,400 customers. We added almost 800 more customers in Q1,” Robbins said. “And at the AI Defense layer, we’re now protecting 2 trillion tokens per month. And we’re approaching 500 customers have that AI Defense. And so we’re seeing good activity there. We’re using Splunk as a platform for AI security. And we’re also seeing customers really buy into the security and networking coming together on monitoring workloads, east-west traffic segmentation with technologies like Hypershield and Live Protect.” “Earlier this week, we announced that we are integrating Anthropic’s Claude Mythos cybersecurity model into Cisco AI Defense for adaptive AI red teaming. This provides automated, continuous testing across enterprise systems, empowering defenders to stress test AI systems with frontier adversary reasoning,” Robbins said.