Analyst(s): Futurum Research
Publication Date: February 13, 2026
Cisco’s Q2 FY 2026 delivered double-digit revenue and EPS growth with broad-based product order acceleration, led by AI infrastructure and campus networking. Near-term margin pressure from memory costs remains, but management outlined pricing, contracting, and supply-chain actions while reiterating full-year guidance.
What is Covered in this Article
- Cisco’s Q2 FY 2026 financial results
- AI infrastructure orders and Silicon One roadmap
- Margin headwinds and mitigation plans
- Campus networking refresh accelerates orders
- Guidance and Final Thoughts
The News: Cisco Systems (NASDAQ: CSCO) reported Q2 FY 2026 revenue of $15.3 billion, up 10% year-on-year (YoY) and above the Wall Street consensus of $15.1 billion. Product revenue was $11.6 billion, up 14% YoY, while services revenue was $3.7 billion, down 1% YoY. By product group, Networking was $8.3 billion (up 21% YoY), Security was $2.0 billion (down 4% YoY), Collaboration was $1.1 billion (up 6% YoY), and Observability was $0.3 billion (flat YoY). Non-GAAP operating income was $5.3 billion (up 9% YoY), with non-GAAP operating margin of 34.6%. Non-GAAP net income was $4.1 billion (up 10% YoY) and non-GAAP EPS was $1.04 (up 11% YoY).
“With over 40 years of customer trust, global scale, and a relentless focus on innovation, we believe Cisco is uniquely positioned to deliver the trusted infrastructure needed to securely and confidently power the AI-era,” said Chuck Robbins, chair and CEO. “We see strong, broad-based demand for our technology solutions and remain focused on capturing the significant opportunities we see ahead.”
Cisco Q2 FY 2026 Earnings: AI Infrastructure Momentum Lifts Results
Analyst Take: Cisco’s quarter underscores robust demand for AI-ready networking and a broad campus refresh cycle, even as elevated memory costs weigh on gross margin near term. Product orders accelerated across all regions and segments, with hyperscaler AI infrastructure orders stepping up sequentially. Management raised its FY 2026 AI orders outlook while detailing commercial and supply actions to mitigate cost pressures. The setup into the second half includes continued hardware momentum, a growing software and subscriptions base, and steady execution against full-year guidance.
AI Infrastructure Momentum and Silicon One Roadmap
Hyperscaler AI infrastructure orders reached $2.1 billion in Q2, up from $1.3 billion in the prior quarter, matching the total taken in all of FY 2025, signaling accelerating demand across silicon, systems, and optics. Cisco now expects to take AI orders in excess of $5.0 billion and to recognize over $3.0 billion in AI infrastructure revenue from hyperscalers in FY 2026, with mix trending about 60% systems and 40% optics in the most recent quarter. The company shipped its one-millionth Silicon One chip and introduced the 102.4 Tbps G300, alongside new 8000 and Nexus 9000 systems with air- and liquid-cooled options to address diverse data center architectures. Cisco also announced new 1.6 Tbps OSFP and 800G LPO pluggables using Silicon Photonics, while Acacia reported its strongest quarter-to-date with triple-digit bookings growth and 800G pluggables ramping. Beyond hyperscalers, Cisco booked $350 million in AI orders from neocloud, sovereign, and enterprise customers, with a pipeline exceeding $2.5 billion, including a JV plan with AMD and HUMAIN targeting up to 1 GW of AI infrastructure by 2030. These dynamics position Cisco to capture multi-segment AI infrastructure demand across systems, silicon, and optics.
Managing Margin Headwinds from Memory Costs
Non-GAAP gross margin was 67.5% in Q2, down 120 basis points YoY, and Q3 guidance at 65.5%–66.5% came in below consensus, reflecting mix and higher memory costs. Cisco outlined mitigation levers: announced price increases, revised T&Cs with partners and customers, and leveraging scale to negotiate favorable supplier terms. Advanced purchase commitments increased by $1.8 billion over the last 90 days and approximately 73% YoY, with a significant portion focused on securing memory. Management expects timing effects in component costs and operational discipline to support a path toward improvement, with software growth also aiding mix over time. Overall, near-term margin pressure appears manageable given pricing, contracting, and supply-chain actions already in flight.
Campus Networking Refresh and Product Order Acceleration
Total product orders grew 18% YoY, with networking orders accelerating to more than 20% YoY—marking the sixth consecutive quarter of double-digit growth. Strength was broad across campus switching, data center switching, wireless, service provider routing, enterprise routing, compute, and industrial IoT, with data center switching delivering double-digit growth in six of the last eight quarters. Management highlighted a multi-year, multi-billion-dollar campus refresh underpinned by next-gen switching, routing, and wireless platforms, as well as AI-native capabilities that embed security and modernize campus operations. Industrial IoT delivered its seventh consecutive quarter of double-digit growth, supported by onshoring trends and the rise of AI workloads at the edge. These demand drivers, alongside Silicon One expansions and optics ramp, support sustained product momentum while subscriptions represented 51% of total revenue and ARR reached $31.0 billion, up 3% YoY (product ARR up 6%). The combination of refresh cycles and AI-ready portfolios provides durable growth vectors across enterprise and service provider segments.
Guidance and Final Thoughts
Cisco guided Q3 FY 2026 revenue to $15.4 billion–$15.6 billion, non-GAAP gross margin to 65.5%–66.5%, non-GAAP operating margin to 33.5%–34.5%, and non-GAAP EPS to $1.02–$1.04; FY 2026 revenue is guided to $61.2 billion–$61.7 billion with non-GAAP EPS at $4.13–$4.17. Management reiterated strong demand signals across customer markets and regions while acknowledging component cost pressures and mix as near-term headwinds. The dividend was raised 2% to $0.42 per share, reflecting confidence in cash generation and a commitment to return at least 50% of free cash flow. Execution against pricing, contracting, and supply procurement should help stabilize margins as AI infrastructure ramps and the software mix gradually improves. With AI orders and campus refresh momentum building, Cisco’s setup into H2 FY 2026 appears supported by visibility in hyperscaler and enterprise pipelines.
See the full press release on Cisco’s Q2 FY 2026 financial results on the Company website.
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