Cisco (CSCO) reported quarterly earnings and guidance that surpassed Wall Street expectations on Thursday, yet its stock price suffered a significant decline. Shares fell as much as 8.4% during the session, closing at $113.47, a noticeable retreat from the all-time closing high of $130 set in June. The stock had gained over 60% year-to-date, with the market broadly viewing it as a beneficiary of the artificial intelligence (AI) boom.

Revenue and guidance beat across the board

Revenue for the fourth fiscal quarter surged 18% year-over-year to $17.3 billion, exceeding the analyst consensus of $16.8 billion. The company projected current-quarter revenue to land between $18.0 billion and $18.2 billion, also well above the market's average estimate of $16.8 billion. Cisco also provided a full-year revenue growth forecast of approximately 15%. CEO Chuck Robbins emphasized in an interview, "We just had a record year and a record quarter." He added that the company is entering a new fiscal year facing a market full of opportunities, though it will maintain a degree of caution at the start.

Analysts: Good numbers, but guidance appears cautious

Despite the strong results, analysts at Piper Sandler noted in a report following the earnings release that while the quarter's figures were solid, the guidance "appears cautious in the current demand environment." They suggested some investors may be starting to pick at the idea that growth is nearing its peak, maintaining a "Hold" rating on the stock. In contrast, KeyBanc Capital Markets retained a bullish stance, assigning an equivalent "Buy" rating. The firm believes Cisco is well-positioned to increase its market share as hyperscale cloud providers continue to ramp up capital expenditures and emerging cloud providers accelerate their investments.

AI infrastructure orders a highlight

AI-related business remained a key focus for the market. Hyperscale cloud providers placed $4 billion in infrastructure orders with Cisco during the quarter, bringing the total for the full fiscal year to $9.3 billion. This customer segment contributed approximately $4 billion in revenue last fiscal year, and Cisco expects that figure to nearly double to $7.5 billion by fiscal 2027.

Market still has concerns

Although the current fiscal year's growth outlook is solid, analysts generally expect revenue growth to slow to single digits in the following fiscal year. Against the backdrop of a stock that has already rallied significantly and a market sensitive to the concept of "peak growth," even guidance that was better than expected failed to prevent investors from taking profits. Overall, Cisco demonstrated its ability to capitalize on the AI infrastructure wave with its actual performance, but a "cautious start to the year" and concerns that "growth may be peaking" combined to fuel Thursday's selling pressure.