Five takeaways from Cisco’s blowout quarter and what it means to customers

Cisco Systems delivered a blowout Q3 FY2026 performance that surpassed even the most optimistic expectations, posting record revenue of $15.8 billion, up 12% year-over-year, with product revenue surging 17%. The networking giant’s momentum is accelerating across multiple fronts, driven by demand for AI infrastructure, campus modernization, and strategic silicon investments.

Here are five key takeaways from what CEO Chuck Robbins described as a quarter when Cisco’s “technology is more relevant than ever in the AI era.”

1. AI infrastructure orders skyrocket to $9 billion for FY26

Cisco significantly raised its AI infrastructure order expectations for hyperscalers to $9 billion for fiscal year 2026, nearly double the company’s previous $5 billion forecast. The company took in $1.9 billion in AI infrastructure orders from hyperscalers in Q3 alone, with the year-to-date total reaching $5.3 billion before entering the final quarter. (Related story: Cisco announced layoffs along with its Q3 results)

“Given the strong demand, we now expect to take AI infrastructure orders of approximately $9 billion from hyperscalers in FY ’26, 4.5x our FY ’25 total,” Robbins announced on the earnings call. This explosive growth is driven by both Silicon One systems and Acacia coherent pluggable optics. The Acacia business posted its strongest quarter ever, with over $1 billion in orders, and is tracking to grow over 200% year-over-year.

Cisco secured five new hyperscaler design wins in Q3, including the company’s first two wins for Silicon One P200-powered systems for “scale across” use cases. “During Q3, we were awarded two different hyperscalers’ P200 design wins, which is our product that is used for scale across applications,” Robbins said, adding that a third P200 scale-across design win came in early Q4. The company has now shipped over 750,000 400-gig and 40,000 800-gig coherent pluggable optics, which Cisco believes “far exceeds the next largest supplier shipments for both speeds.”

2. Broad-based demand drives 35% order growth

Total product orders grew an impressive 35% year-over-year, with strength across customer segments and geographies. “Overall, total product orders grew 35% year-over-year. Excluding hyperscaler orders, which grew by triple digits, product orders were up 19% year-over-year, demonstrating the continued broad-based demand we see for our technology globally,” Robbins reported.

Enterprise product orders grew 18%, public sector orders jumped 27%, and service provider and cloud orders accelerated 105%. Networking product orders grew more than 50% in Q3, marking the seventh consecutive quarter of double-digit growth for Cisco’s networking portfolio. Campus networking posted record orders, up more than 25% year-over-year, with wireless orders reaching their highest level ever, with 40%+ growth.

CFO Mark Patterson addressed investor concerns about demand pull-forward: “I think that it’s reasonable to assume that there is some level of pull ahead into Q3. I do think it’s very difficult to speculate exactly how much, but we believe it was a very modest amount.” Patterson cited three key data points: price increases accounted for approximately 4-5 points of order acceleration; the Q4 pipeline pull-forward was consistent with historical patterns; and “the pipeline is very healthy, very good year-over-year growth.”

3. Silicon One becomes a massive competitive differentiator

Cisco’s long-term investment in developing its own Silicon One chips is paying enormous dividends, with roughly half of the company’s AI infrastructure revenue coming from Silicon One-based systems. “I’ve said repeatedly on these calls over the last couple of years that as we move to the future, if you don’t have silicon, you’re going to struggle to be relevant to the hyperscalers. And I think that’s what we’re seeing,” Robbins emphasized.

Beyond revenue generation, Silicon One gives Cisco significantly greater control over its supply chain — a critical advantage in a constrained component environment. “The fact that we design our own silicon really gives us greater control end-to-end. I mean, the fact that we’re directly managing wafers, substrates, assembly, and test really gives us much more control over the supply chain,” Patterson explained.

The company has secured silicon supply through the calendar year 2026, with negotiations underway for 2027. While competitors face potential decommits due to supply constraints, Patterson reported: “I just want to reiterate what Chuck said: We did not see any decommits in the quarter.” This strategic control allows Cisco to commit to hyperscalers with confidence, while competitors struggle with dependencies on merchant silicon.

4. Campus modernization cycle just beginning

Cisco is in the early stages of what it believes will be a “multiyear, multibillion-dollar campus refresh opportunity” driven by AI workloads and rising network traffic. “Research conducted recently with around 3,500 technology leaders across global enterprises confirms increased urgency to modernize campus and branch networks,” Robbins said, adding that “with traffic across these networks expected to increase 3x over the next 3 years because of AI, 93% of respondents are accelerating their network modernization plans.”

Wi-Fi 7 adoption is accelerating rapidly, with Robbins reporting “strong double-digit sequential growth in orders for Wi-Fi 7, making up half of the wireless mix in Q3.” Cisco’s Unified Edge solution is gaining traction, as a single enterprise deal secured over 1,200 units, bringing together compute, networking, security, storage, and software to run AI applications at the edge.

The industrial IoT portfolio posted its strongest quarter ever in Q3, marking eight consecutive quarters of double-digit growth. “We expect this demand to continue with the onshoring of manufacturing to the United States and as agentic and physical AI are expected to drive massive increases in network traffic,” Robbins stated. He noted that customers are preparing for “inferencing and agentic applications” where “the network is incredibly important, and moving the bits around with low latency is super important.”

5. Security portfolio turning the corner

After several quarters of challenges, Cisco’s security business is finally showing meaningful improvement, with double-digit order growth in firewalls and continued strength in new products. “In Q3, our core security portfolio, excluding Splunk, saw double-digit order growth across new and refreshed products, with strong double-digit year-over-year growth in firewalls,” Robbins reported.

The company’s new security products, including Secure Access, XDR, Hypershield, and AI Defense, attracted more than 1,000 new customers in Q3, bringing the total to approximately 5,000 since launch. “I think last call, I said we would exit this fiscal year approaching double-digit revenue growth on the traditional organic Cisco security portfolio. And I think we’re heading in that direction, and I feel good about us actually making that happen,” Robbins said.

Cisco is positioning itself for AI-driven security threats through participation in Project Glasswing, Anthropic’s Claude Mythos preview model testing, and OpenAI’s Trusted Access for Cyber program. “AI is accelerating the pace of innovation for security defenders and adversaries, and we are innovating with speed and scale to help create an asymmetrical advantage for defenders,” Robbins said. The company announced major security innovations, including DefenseClaw for safely deploying agents and Zero Trust Access for AI agents, as well as planned acquisitions of Galileo and Astrix for agentic identity and access management.

Recommendations for Cisco customers

• Assess your AI readiness now : With 93% of enterprises accelerating network modernization and campus traffic expected to triple over the next three years, customers should conduct infrastructure assessments immediately to identify bottlenecks and capacity constraints before they become critical. The growing deployment of inferencing and agentic AI applications requires low-latency, high-capacity networking that legacy infrastructure cannot support.
• Prioritize security modernization : The emergence of AI-powered security threats creates significant risk for organizations running unpatched or end-of-support equipment. Customers should audit their infrastructure for technology beyond the end of support and develop migration plans to Cisco’s new security portfolio, including Hypershield, XDR, and AI Defense capabilities.
• Plan campus refresh cycles around Wi-Fi 7 and next-gen switching: With Wi-Fi 7 already accounting for half of Cisco’s wireless mix, and next-generation switching and routing ramping faster than in prior product launches, customers should align campus refresh initiatives with these platforms to maximize performance and longevity. The campus modernization cycle is just beginning, giving early movers a competitive advantage in supporting AI workloads.
• Lock in supply and pricing now: While Cisco’s Silicon One strategy offers better supply chain control than competitors’, memory constraints and component shortages remain industry-wide challenges. Customers with major infrastructure projects should engage Cisco early to secure supply commitments, particularly for AI infrastructure, high-density switching, and advanced optics, where lead times may be longer. The company has implemented pricing actions in response to rising memory costs, making current pricing potentially more favorable than future quotes.
• Explore edge AI and industrial IoT opportunities : Cisco’s Unified Edge solution and industrial IoT portfolio are experiencing exceptional growth as organizations deploy AI applications where data is generated, and decisions are made. Manufacturers and enterprises with distributed operations should evaluate these platforms for edge computing, particularly given U.S. manufacturing onshoring trends and the emergence of agentic and physical AI applications.