Cisco earnings: AI orders and profitability look strong despite second-half choppinessWe’ve raised our fair value estimate of Cisco stock.William Kerwin, CFA13 February 2026 Article Page URL has been copied to clipboard for sharing. Mentioned: Cisco Systems Inc (CSCO)Key Morningstar metrics for Cisco SystemsFair Value Estimate: $75.00Morningstar Rating: ★★Morningstar Economic Moat Rating: WideMorningstar Uncertainty Rating: MediumWhat we thought of Cisco Systems’ earningsCisco Systems’ CSCO January-quarter results beat guidance, and management raised its full-year outlook. Sales of $15.3 billion rose 10% year over year, and fiscal 2026 growth guidance rose to 8%, from 7%. Management also raised its fiscal 2026 AI order outlook to $5 billion, up from more than $4 billion.Why it matters: AI infrastructure demand and an ongoing campus network refresh cycle are driving robust growth for Cisco. Shares dropped 7% after hours, over implied fiscal-second-half margin compression and softer AI orders. We don’t view either as a significant worry for long-term investors.Gross margin is guided down 150 basis points sequentially in the April quarter—not a surprise, given rising memory input prices. The midpoint of 66% is a strong level. We don’t see much more compression, given Cisco’s ability to pass on price increases with a loyal customer base.We like the higher AI order guide, which we see as conservative. It implies a slowdown from $3.4 billion in AI orders booked in the first two fiscal quarters, but we know orders from AI model builder customers can be lumpy. More than 100% AI order growth remains positive.The bottom line: We raise our fair value estimate for wide-moat Cisco to $75 per share from $67, with a higher AI growth forecast. Second-half AI order lumpiness and margin compression are short-term, low impacts on our valuation. Shares look fairly valued.AI is a minority of sales but an outsize growth driver. Guidance for more than $3 billion in AI revenue in fiscal 2026 implies AI making up 40% of Cisco’s total growth, despite being only 5% of total sales. We model AI remaining a primary growth driver, reaching $11 billion in fiscal 2030.Campus and enterprise networking remain a heavier contributor to results, and we observe a strong campus refresh cycle driving supernormal, high-single-digit growth in fiscal 2026. We expect this to taper toward midcycle levels closer to 3% after fiscal 2027.Get Morningstar insights in your inbox Newsletterapple newsnews