Cisco's falling margin shows hyperscaler AI is now big enough to reshape the business

DIGITIMESAugust 13, 2026en

Cisco Systems closed fiscal 2026 with results that would normally have looked decisively positive. Revenue rose 18% to US$17.3 billion, networking orders posted double-digit growth for an eighth straight quarter, and AI infrastructure orders from hyperscalers reached 4.5 times the previous year's total. Yet the market's focus shifted to a less comfortable signal: Cisco expects non-GAAP gross margin to ease next quarter, suggesting the hyperscaler business is now large enough to move the company's overall economics.

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