New York, February 12, 2026, 11:20 (EST) — Regular session
- Cisco shares down about 11% in morning trade after quarterly results and outlook
- Company lifted its fiscal 2026 revenue forecast but guided to lower gross margin next quarter
- Investors focus on memory cost inflation and whether AI orders translate into profitable growth
Cisco Systems, Inc. shares were down about 11% at $76.21 in late-morning trade on Thursday, as investors digested the networking gear maker’s quarterly results and fresh outlook.
That matters because Cisco sits in the plumbing of data centers and corporate networks. The market has been rewarding anything tied to the AI build-out, but it has also been quick to punish hardware names when profitability looks fragile.
Margins are the pressure point right now. Gross margin — what’s left after the direct cost of making and shipping gear — is often where cost inflation shows up first, and it can move guidance faster than demand does.
Cisco said revenue rose 10% to $15.3 billion in its fiscal second quarter ended Jan. 24, with non-GAAP (adjusted) earnings of $1.04 per share and non-GAAP gross margin of 67.5%. It forecast third-quarter revenue of $15.4 billion to $15.6 billion and non-GAAP gross margin of 65.5% to 66.5%, and raised its fiscal 2026 revenue outlook to $61.2 billion to $61.7 billion; the company said its EPS guidance reflects tariff assumptions under current trade policy. CEO Chuck Robbins called the quarter “strong,” while CFO Mark Patterson said operating margin was “above the high end of guidance”; Cisco lifted its quarterly dividend to $0.42 and said it repurchased about 18 million shares in the quarter. (Cisco Investor Relations)
Reuters reported that the margin squeeze is tied to a global rise in memory prices, as the rush to build AI infrastructure tightens supply. Robbins said Cisco has raised prices and is revising contract terms, and he expects AI orders above $5 billion and more than $3 billion of AI infrastructure revenue from hyperscalers in fiscal 2026. “Compressed margins definitely took some shine off the report,” said Jake Behan, head of capital markets at Direxion. (Reuters)
Cisco has also been using this week’s Cisco Live in Amsterdam to push its AI networking pitch. On Feb. 10 it rolled out its Silicon One G300 switching chip and new systems aimed at scaling AI data centers; product chief Jeetu Patel said Cisco is delivering infrastructure customers need “to move fast” on AI, with shipments expected this year. Cisco Live Amsterdam runs Feb. 9-13. (Cisco Newsroom)
The drop bled into other hardware names in morning trade, with Arista Networks down about 4.6%, Dell Technologies off about 7.7% and Hewlett Packard Enterprise down about 6.5%.
But the risk case is straightforward: if memory costs stay high longer than expected, or if customers push back on price increases, margins can fall faster than revenue grows. For a stock leaning on an AI narrative, that’s an uncomfortable mix.
Investors will be watching whether Cisco’s pricing actions stick, how quickly cost pressure shows up in the March-quarter numbers, and whether AI orders convert cleanly into revenue rather than sitting in backlog.
Next up is more color from management and customers at Cisco Live in Amsterdam through Friday, with traders listening for anything new on costs, pricing and hyperscaler demand.
