Cisco Q1 2027: AI Revenue Target Raised to $9B, Stock Up

Cisco beat Q1 fiscal 2027 estimates, raised its full-year outlook and lifted its hyperscaler AI infrastructure revenue target to $9B as shares rose after hours.

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What Did Cisco Report for the Quarter?

Cisco's revenue of $18.5B was up 24% from $14.9B a year earlier, which management called its fastest growth rate in more than 15 years. Product revenue rose 32% and services revenue rose 1%.

GAAP EPS was $1.14, up 58%, and non-GAAP EPS rose 40%. Adjusted operating margin reached a record 37.8%, and operating cash flow was $4.4B, up 36%. GAAP net income was $4.6B, compared with $2.9B in the prior-year quarter.

How Much Did Cisco Raise Its AI Infrastructure Target?

Cisco now expects $9B in AI infrastructure revenue from hyperscalers in fiscal 2027, up from a prior target of $7.5B and more than twice the FY2026 total. Management cited improved visibility into hyperscaler deployments.

Hyperscale customers are expected to account for about 12% of total revenue in fiscal 2027, double the 6% share in fiscal 2026. The shift reflects demand for switching, optics and routing gear that connects AI clusters inside and between data centers. Chief Executive Chuck Robbins described the demand as the start of a multi-year networking supercycle.

What Is Cisco's Updated Guidance?

Cisco raised FY2027 revenue guidance to $74.8B-$75.8B. Non-GAAP EPS is now forecast at $5.47-$5.53, and GAAP EPS at $4.38-$4.44. The chief financial officer said Q1 exceeded the high end of the company's guidance ranges, which supported the higher full-year view and showed significant operating leverage.

For the second quarter, Cisco guided to revenue of $18.0B-$18.2B, above the $17.88B consensus, and non-GAAP EPS of $1.34-$1.36, against $1.23 expected.

Why Did the Shares React This Way?

Shares rose about 4% after hours because the quarter combined a revenue and earnings beat with higher guidance and a larger AI target. The stock had already gained roughly 35% in 2026 through Thursday's session, compared with about 9% for the Nasdaq, so the results had to clear elevated expectations.

The reaction fits a broader pattern among ai stocks, where investors reward companies that convert infrastructure spending into reported revenue and not just order commentary. Cisco's quarterly dividend remains $0.42 per share. It repurchased 18 million shares for $2.0B during the quarter.

Strategic Context

For years Cisco was viewed as a laggard in the generative AI buildout, with leadership in the segment held by chip and server suppliers. The latest figures show hyperscalers adding Cisco networking products as clusters scale, while enterprise customers refresh campus and data center networks for AI workloads. A larger hyperscale mix also brings concentration risk, since a small number of customers now drive a growing share of growth.

Key variables for the coming quarters include the pace of hyperscaler capital spending, component supply and costs, and whether enterprise refresh cycles broaden beyond the largest cloud operators.

Outlook

Cisco enters the second quarter with record margins, a higher full-year revenue range and a $9B hyperscaler AI target that implies continued acceleration in networking. The company's next quarterly report will show whether the guided second-quarter revenue of $18.0B-$18.2B is met and whether hyperscaler deployments track the higher target.