Cisco’s recent fiscal reports highlight the company’s promising trajectory, yet a closer look at its security segment reveals a growth rate of only 9%, which is arguably misleading given the context.
In their latest earnings announcement, Cisco reported quarterly revenues of $14.67 billion, exceeding expectations. This momentum has positioned Cisco favorably going into fiscal year 2026, with guidance suggesting further growth. However, within these figures, the security division’s performance raises eyebrows, as its modest growth stands in stark contrast to competitors in the market.
The security unit’s reported revenue for the quarter was $1.952 billion. During an investor Q&A, CEO Chuck Robbins explained that this growth figure reflects a mix of older, legacy products that are not the focus of new investments and a collection of new solutions, including extended detection and response (XDR) and secure access service edge (SSE) solutions. If evaluated solely on the performance of its newer offerings, Cisco’s growth rate in security would be a strong 20%. Moreover, when excluding challenges from U.S. Federal clients, the rest of the business has seen double-digit growth.
Robbins presented data showing that the company had acquired 80 new customers for its Hypershield technology and over 480 new SSE customers in the last quarter, further reinforcing that Cisco’s security business is undergoing a significant transformation and is poised for ongoing growth as older products phase out.
Additionally, Cisco reported an impressive total of over $800 million in AI infrastructure orders from major web-scale customers during the fourth quarter, significantly outpacing their original projections. This achievement underlines Cisco’s enhanced market presence within the AI infrastructure sector, a crucial area for the company as it aims to solidify its position in this evolving market landscape.
Looking ahead, Cisco is focusing on capitalizing on this AI-driven growth. The rise in network traffic spurred by AI interactions will necessitate infrastructure upgrades, particularly in campus networks. As AI agents become more autonomous, the demand for robust security measures becomes increasingly critical. Cisco has introduced Smart Switches designed for this new reality, which should facilitate substantial upgrades in this space.
In addition to product innovation, Cisco’s strategy under the leadership of Chief Product Officer Jeetu Patel aims to unify product development across its business units, enhancing Cisco’s overall value proposition and ensuring seamless integration among its technologies.
Finally, while Cisco’s growth story remains optimistic, external factors like fluctuating tariffs remain a concern. The newly appointed CFO acknowledged the complexities introduced by tariffs, urging careful navigation through the current landscape.
In conclusion, although Cisco’s quarterly results may not have generated groundbreaking excitement, they reflect a steady progress aligned with evolving tech needs, especially in AI infrastructure. As the company continues to innovate and adapt, steady growth should be expected, although not without its challenges.
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