Analyst(s): Futurum Research
Publication Date: May 15, 2026
Cisco’s Q3 FY 2026 results point to stronger demand for AI networking and faster-than-expected hyperscaler order traction. The quarter also showed that pricing actions and supply-chain controls are becoming more central to protecting margins as the hardware mix rises.
What is Covered in This Article:
- Cisco’s Q3 FY 2026 financial results
- Hyperscaler AI infrastructure orders accelerate
- Campus networking refresh cycle expands
- Security repositioning for agentic AI risks
- Guidance and Final Thoughts
The News: Cisco Systems (NASDAQ: CSCO) reported Q3 FY 2026 results for the quarter ended April 25, 2026. Revenue was $15.8 billion, up 12% year-on-year (YoY), versus the Wall Street consensus of $15.6 billion. Networking revenue was $8.8 billion, up 25% YoY; security revenue was $2.0 billion, flat YoY; collaboration revenue was $1.0 billion, down 1% YoY; and observability revenue was $269 million, up 3% YoY. Non-GAAP operating margin was 34.2% (Q1 FY 2025: 34.5%), versus consensus of 34.0%, and non-GAAP gross margin was 66.0% (Q1 FY 2025: 68.6%), versus consensus of 66.2%. Non-GAAP earnings per share (EPS) was $1.1, up 10% YoY.
“Cisco delivered record quarterly revenue in Q3, and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI,” said Chuck Robbins, chair and chief executive officer of Cisco. “Our innovation pipeline is accelerating, and our latest offerings across the portfolio are seeing some of the fastest adoption in our history. This translates to broad-based, record-high demand for our technology, which has never been more relevant to customers than it is in the AI era.”
Cisco Q3 FY 2026: AI Networking Momentum Drives Raised Outlook
Analyst Take: Cisco used Q3 FY 2026 to reset expectations for hyperscaler AI infrastructure demand and to tighten the link between silicon ownership and share capture in high-end networking. The quarter also signaled that campus networking is moving into a sustained refresh phase rather than a one-off upgrade cycle. Security remained a mixed picture, but the company tied its roadmap more directly to agentic AI risks and the need to secure AI agents and model behavior. The near-term question is how Cisco balances hardware-led growth with margin protection as memory costs and product mix shift.
AI Infrastructure Orders And Silicon One Control
Cisco raised its expected hyperscaler AI infrastructure orders for FY 2026 to $9 billion, up from a prior $5 billion target, with $5.3 billion already taken year to date. AI infrastructure orders from hyperscalers were $1.9 billion in Q3 FY 2026, up from $600 million a year earlier, and the company positioned Silicon One systems as a core driver of those wins. Management tied silicon ownership to greater supply assurance by managing wafers, substrates, assembly, and test directly, which matters in a tightening component environment. Cisco also described early traction for scale-across Silicon One P200 design wins, but indicated those wins will not contribute at scale until FY 2027. The company also pointed to strong momentum in Acacia optics, including more than $1 billion in orders in Q3 FY 2026 and a plan for over 200% YoY growth in FY 2026. Cisco is trying to turn silicon and optics into a defensible loop: win designs, secure supply, then win more designs.
Campus Networking Refresh And Enterprise AI Readiness
Cisco framed campus and enterprise networking demand as driven by modernization needs tied to AI traffic growth and operational security requirements. In Q3 FY 2026, campus networking orders grew more than 25% YoY, and data center switching orders grew more than 40% YoY. Wireless orders grew by more than 40% YoY, and the company said Wi-Fi 7 accounted for about half of its wireless mix in the quarter. Management cited research with about 3,500 enterprise technology leaders indicating that 93% are accelerating network modernization plans, with traffic expected to triple over three years due to AI. The company also pointed to growing enterprise AI infrastructure activity, including Nexus switch orders tagged for AI deployments, rising nearly 50% sequentially in Q3 FY 2026. Cisco is positioning campus refresh as a multi-year budget category that becomes harder to defer as AI workloads expand.
Security Repositioning Around Agentic AI And Observability
Cisco described improving traction in its newer security products, while legacy portfolio declines still offset growth, though less than in H1 FY 2026. Firewalls showed strong order growth, and management reiterated its expectation to exit FY 2026 with the organic Cisco security portfolio approaching double-digit YoY revenue growth. The company tied security strategy to agentic AI, with new efforts focused on securing AI agents, monitoring model behavior, and embedding security into networking. Cisco also discussed work tied to proactive defense testing and open-sourcing security evaluation blueprints, and it connected that to customer concerns about unpatchable infrastructure and end-of-support equipment. Splunk remained a near-term drag due to an ongoing shift from on-premises deals to cloud subscriptions, which impacts reported revenue timing. Cisco is pushing security toward a platform story that combines agent identity, access, monitoring, and response tied to AI-driven threats.
Guidance And Final Thoughts
Cisco guided Q4 FY 2026 revenue of $16.7 billion to $16.9 billion, above Wall Street consensus of $15.8 billion, with non-GAAP EPS of $1.16 to $1.18. Cisco raised guidance for FY 2026 revenue to $62.8 billion to $63.0 billion (previously: $61.2 billion to $61.7 billion) and raised expected FY 2026 AI infrastructure revenue from hyperscalers to $4 billion, up from $3 billion. The company now sees non-GAAP EPS of $4.27 to $4.29 (previously $4.13 to $4.17). Cisco also announced a restructuring plan with up to $1 billion in pre-tax charges, with about $450 million expected in Q4 FY 2026 and the remainder in FY 2027.
Cisco’s quarter suggests the company is becoming more directly tied to AI infrastructure spending cycles rather than relying primarily on traditional enterprise networking refresh patterns. The stronger hyperscaler order trajectory and accelerating demand for optics indicate that Cisco is gaining relevance in higher-performance AI networking layers, where supply assurance and silicon integration increasingly influence vendor selection. At the same time, the shift toward hardware-heavy growth and restructuring-driven investment reallocation creates pressure to sustain execution and margin discipline as competitive intensity rises across AI infrastructure markets.
See the full press release on Cisco’s Q3 FY 2026 financial results on the company website.
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