Chuck Robbins Says AI Is Fueling a "Networking Supercycle." Cisco's Guide Puts a $7.5 Billion Number on It.

Cisco Systems (NASDAQ: CSCO) delivered about as strong a close to fiscal 2026 as investors could have asked for. Fourth-quarter revenue rose 18% year over year to a record $17.3 billion, and full-year revenue climbed 12% to a record $63.3 billion. Management also guided fiscal 2027 revenue to grow about 15% at the midpoint -- a second straight year of accelerating growth for a company that grew 5% in fiscal 2025.

CEO Chuck Robbins put a name on what's driving it. "We believe the accelerating adoption of agentic AI is fueling a Networking Supercycle," he said on Wednesday's fiscal fourth-quarter earnings call.

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The sell-off has little to do with growth. It's about what the growth costs, and to me the place to see it is Cisco's gross margin.

For the past two years, Cisco's artificial intelligence (AI) story lived mostly in its order book.

In fiscal 2026, the company took $9.3 billion of AI infrastructure orders from hyperscalers (the giant cloud companies building AI data centers), including $4 billion in the fourth quarter alone. Orders from customers beyond the hyperscalers (smaller AI-focused clouds, governments, and enterprises) topped $1 billion for the year. And the demand reaches well past AI. Total product orders rose 35% year over year in the fourth quarter, while networking product orders grew 40%, the eighth straight quarter of double-digit growth for that portfolio.

Now the orders are showing up in revenue. AI infrastructure for hyperscalers produced about 6% of Cisco's total revenue in fiscal 2026, up from less than 2% in fiscal 2025. Management expects that revenue to reach $7.5 billion in fiscal 2027, roughly a tenth of the $72.2 billion to $73.4 billion it guided for.

Put another way, in two years the business will have gone from a sliver of Cisco's revenue to about a tenth of it, if the guide holds.