Cisco reports fourth straight quarter of declining revenue
Cisco CEO Chuck Robbins speaks at The Wall Street Journal’s Future of Everything Festival in New York on May 21, 2024.
Dia Dipasupil | Getty Images
Cisco reported a fourth straight quarter of declining revenue even as results topped analysts’ estimates. The stock slipped 2.5% in extended trading.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: 91 cents adjusted vs. 87 cents expected
- Revenue: $13.84 billion vs. $13.77 billion expected
Cisco’s revenue dropped 6% in the quarter ended Oct. 26, from $14.7 billion a year earlier, according to a statement. Net income fell to $2.71 billion, or 68 cents per share, from $3.64 billion, or 89 cents per share, in the same quarter a year ago.
Networking revenue plunged 23% to $6.75 billion, slightly below the $6.8 billion consensus of analysts surveyed by StreetAccount.
Security revenue doubled to $2.02 billion, topping the StreetAccount consensus of $1.93 billion. Cisco’s revenue from collaboration was $1.09 billion, a bit below the $1.04 billion consensus estimate.
Cisco CEO Chuck Robbins said on the earnings call on Wednesday that orders from large-scale clients for artificial intelligence infrastructure exceeded $300 million in the quarter. Server makers such as Dell and HPE have also focused on sales of hardware that can help clients implement generative AI.
“We have earned more design wins and remain confident that we will exceed our target of $1 billion of AI orders this fiscal year from web-scale customers,” Robbins said.
Cisco has announced hardware containing Nvidia’s graphics processing units, which are widely used for training AI models, Robbins said.
“Over time, you’ll see us support other GPUs as the market demands,” he said. “But that partnership is still going fine. It’s still early. And I think 2025 is when we’ll start to see enterprise real deployment of some of these technologies.”
For now, enterprises are updating data center infrastructure to prepare for AI and the widespread deployment of AI applications, Robbins said.
U.S. government agencies have delayed deals with Cisco, rather than scrapping them altogether. The Fiscal Responsibility Act of 2023, which became law in June of last year, has limited U.S. government spending, said Scott Herren, Cisco’s finance chief.
Herren said that with Republicans poised to control the White House and both houses of Congress, he expects “to get a budget in place relatively soon.”
During the quarter, Cisco acquired security startups DeepFactor and Robust Intelligence.
Cisco lifted its full-year guidance to $3.60 to $3.66 in adjusted earnings per share on $55.3 billion to $56.3 billion in revenue, up from a prior forecast of $3.52 to $3.58 in EPS and $55 billion to $56.2 billion in revenue. Guidance would indicate projected revenue growth of 3.3% at the middle of the range.
Analysts expected adjusted earnings for the year of $3.58 per share on $55.89 billion in revenue.
As of Wednesday’s close, Cisco’s stock was up 17% year to date, while the S&P 500 index is up around 26% over that stretch.
WATCH: The Earnings Setup: Cisco Systems, Applied Materials and Disney
Jensen Huang, chief executive officer of Nvidia Corp., during the US-Saudi Investment Forum at the Kennedy Center in Washington, DC, US, on Wednesday, Nov. 19, 2025.
Stefani Reynolds | Bloomberg | Getty Images
In the weeks leading up to Nvidia’s third-quarter earnings report, investors debated whether the markets were in an AI bubble, fretting over the massive sums being committed to building data centers and whether they could provide a long-term return on investment.
During Wednesday’s earnings call with analysts, Nvidia CEO Jensen Huang began his comments by rejecting that premise.
“There’s been a lot of talk about an AI bubble,” Huang said. “From our vantage point we see something very different.”
In many respects, Huang’s remarks are to be expected. He’s leading the company at the heart of the artificial intelligence boom, and has built its market cap to $4.5 trillion because of soaring demand for Nvidia’s graphics processing units.
Huang’s smackdown of bubble talk matters because Nvidia counts every major cloud provider — Amazon, Microsoft, Google, and Oracle — as a customer. Most of the major AI model developers, including OpenAI, Anthropic, xAI and Meta, are also big buyers of Nvidia GPUs.
Huang has deep visibility into the market, and on the call he offered a three-pronged argument for why we’re not in a bubble.
First, he said that areas like data processing, ad recommendations, search systems, and engineering, are turning to GPUs because they need the AI. That means older computing infrastructure based around the central processor will transition to new systems running on Nvidia’s chips.
Second, Huang said, AI isn’t just being integrated into current applications, but it will enable entirely new ones.
Finally, according to Huang, “agentic AI,” or applications that can run without significant input from the user, will be able to reason and plan, and will require even more computing power.
In making the case of Nvidia, Huang said it’s the only company that can address the three use cases.
“As you consider infrastructure investments, consider these three fundamental dynamics,” Huang said. “Each will contribute to infrastructure growth in the coming years.”
Reversing the slide
In its earnings release, Nvidia reported revenue and profit that sailed past estimates and issued better-than-expected guidance. Last month, Huang provided a $500 billion forecast for sales of the company’s AI chips over calendar 2025 and 2026.
The company said on Wednesday that its order backlog didn’t even include a few recent deals, like an agreement with Anthropic that was announced this week or the expansion of a deal with Saudi Arabia.
“The number will grow,” CFO Colette Kress said on the call, saying the company was on track to hit the forecast.
Prior to Wednesday’s results, Nvidia shares were down about 8% this month. Other stocks tied to the AI have gotten hit even harder, with CoreWeave plunging 44% in November, Oracle dropping 14% and Palantir falling 17%.
Some of the worry on Wall Street has been tied to the debt that certain companies have used to finance their infrastructure buildouts.
“Our customers’ financing is up to them,” Huang said.
Specific to Nvidia, investors have raised concerns in recent weeks about how much of the company’s sales were going to a small number of hyperscalers.
Last month, Microsoft, Meta, Amazon and Alphabet all lifted their forecasts for capital expenditures due to their AI buildouts, and now collectively expect to spend more than $380 billion this year.
Huang said that even without a new business model, Nvidia’s chips boost hyperscaler revenue, because they power recommendation systems for short videos, books, and ads.
People will soon start appreciating what’s happening underneath the surface of the AI boom, Huang said, versus “the simplistic view of what’s happening to capex and investment.”
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