An AI-native platform is a system designed from the ground up with AI as a core part rather than just a feature of the system.

The initiative — which includes commitments from Booz Allen (BAH), BT Group (BTGOF), Cisco (CSCO), Deutsche Telekom (DTEGY) (DTEGF), Ericsson (ERIC), MITRE, Nokia (NOK), OCUDU Ecosystem Foundation, ODC, SK Telecom (SKM), SoftBank (SFTBY) (SFTBF), and T-Mobile (TMUS) — represents a shared pledge to ensure that 6G infrastructure is open, intelligent, and safeguards global trust.

The companies said that beyond traditional connectivity, 6G wireless networks will become the fabric for physical AI, enabling billions of autonomous machines, vehicles, sensors, and robots and increasing demands for security and trust.

Nvidia noted that it is bringing the industry together to advance AI-native, software-defined wireless platforms built on open and trusted principles. By embedding AI across the radio access network, or RAN, edge and core, 6G networks must enable secure integrated sensing and communications, intelligence, and decision-making while supporting interoperability, according to the company.

“Together with a global coalition of industry leaders, NVIDIA is building AI-RAN to transform the world’s telecom networks into AI infrastructure everywhere,” said Nvidia’s CEO Jensen Huang.

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With the sharp post-earnings selloff, analyst sentiment has become a battleground between those focused on a massive AI-driven infrastructure cycle and those wary of rising component costs.

What Do Seeking Alpha Analysts Say About Cisco’s Future?

Analyst expectations for Cisco are currently divided, reflecting a mix of optimism regarding the “AI-era” transition and skepticism over near-term margin headwinds.

Bulls pointed to the company’s massive inflection point in AI infrastructure, noting that orders from hyperscalers reached $2.1B in the second quarter alone. This figure matched the total AI orders for all of fiscal year 2025.

Optimists also highlighted the ongoing campus networking refresh cycle, driven by the end-of-support for legacy products and the rapid adoption of Wi-Fi 7. These analysts believe Cisco is “quietly winning” the AI buildout through its Silicon One architecture and optics portfolio, which are seeing triple-digit growth in specific segments like Acacia.

On the other side of the spectrum, skeptics highlighted the immediate pressure on profitability as non-GAAP gross margins fell 120 basis points to 67.5%. This decline was largely attributed to soaring memory costs and a shifting product mix, which management expects will continue to weigh on margins in the third quarter.

Additionally, some analysts expressed concern over the high valuation multiples relative to growth, pointing out that Cisco’s PEG ratio remains less attractive than faster-growing peers like Arista Networks (ANET).

There is also a shared concern regarding the acquisition of Splunk, as its transition to a cloud-based subscription model is currently creating a drag on revenue growth that may not abate until late in the 2026 fiscal year.

Here’s a breakdown of what some analysts had to say:

• Steven Fiorillo, Rating: Strong Buy: “Cisco just achieved record revenue, accelerating orders, and expanding operating leverage as Cisco is positioning the Silicon One and optics stack in addition to the security platform to monetize the next phase of AI buildout… the current valuation doesn’t make sense for a company that has more than 20% EPS growth on the horizon over the next 2 years.” – Cisco Systems: Quietly Winning The AI Buildout, But Nobody’s Pricing It In

• Justin Purohit, CPA, Rating: Hold: “While I view CSCO’s long-term role in AI infrastructure favorably, I believe better risk-adjusted opportunities exist elsewhere in the market today… gross margin fell 120 basis points in Q2 and is expected to decline further to 65.5%–66.5% in Q3, driven largely by soaring memory costs.” – Cisco Q2 Results: Narrowing Margins Overshadow Earnings Beat, Shares Fairly Valued

• Vladimir Dimitrov, CFA, Rating: Hold: “Cisco’s investors got a reality check that the company is not a pure growth stock, while it was certainly priced as one… In spite of the strong momentum in Networking, the prospects of margin pressures are overwhelming.” – Cisco Q2 Earnings: The Wrong Way To Get On The AI Bandwagon

• Gary Gambino, Rating: Hold: “Cisco is seeing increased orders from AI infrastructure demand as well as normal upgrade cycle timing. However, it looks like it will take until Fiscal Q4 2026 for this to really show up in revenue and EPS. This is due in part to memory supply headwinds and Splunk transitioning to a subscription model.” – Cisco Systems: The Market Is Impatient For Growth

What Do the Quant Ratings Say?

Cisco currently carries a Hold rating according to Seeking Alpha’s quant system. While the company scores exceptionally well in profitability, it faces significant headwinds in valuation and overall revenue growth compared to the broader technology sector.

Profitability: Cisco demonstrates world-class efficiency, receiving an A+ grade. The company’s net income margin of 19% is nearly quadruple the sector median of 5%, reflecting high operational performance even amid rising costs.

Valuation: The company earns a D+ grade for valuation, as it appears overstretched relative to peers. Its Price-to-Book ratio of 6.37 is significantly higher than the sector median of 3.55, though its 2.13% dividend yield remains a strong point for income-focused investors.

Growth: Growth metrics remain a concern, earning a D- grade. Forward revenue growth is projected at 6%, which trails the sector median of 10%, though the company’s 37% CAPEX growth indicates it is investing heavily in future infrastructure.

Momentum: Momentum receives a B grade, supported by a 1-year price performance of 20%. Despite the recent post-earnings dip, the stock has outperformed the broader sector’s 6% decline over the same period.

Earnings Revisions: The revisions category scores a B+, signaling optimism from the analyst community. Over the last 90 days, there have been 20 upward EPS revisions compared to only two downward adjustments, suggesting confidence in the company’s ability to exceed its conservative guidance.

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BofA kept its Buy rating on Arista and raised the price target on the stock to $185 from $175, citing accelerating momentum in 2026.

Analysts led by Tal Liani said that capital expenditure, or Capex, spending is growing and Arista is a strong AI beneficiary.

“Another strong quarter with 4Q revenue growth of 29% YoY above Street’s 24%, 1Q revenue growth guidance of 30% higher than Street’s 22%, and FY26 revenue growth guidance raised to 25% versus 20% prior. We believe the guidance is still too low and that Arista can grow 30%+ in 2026. The Company continues to benefit from elevated network investments by Hyperscalers and Neocloud providers, with Cloud Titans plus Service Providers and second-tier Cloud contributing 68% of revenues in 2025, and Enterprise the remaining 32%,” the analysts added.

The analysts noted that 2026 growth estimates remain conservative. Removing the expected AI and Campus contributions from the total growth guidance, it suggests no growth for theremaining 60% of the business, below the historical 7%, the analysts added.

Accounting for that growth points to total 2026 growth of at least 30%, with additional Capex increases creating incremental upside, according to the analysts.

Liani and his team said that Microsoft and Meta combined grew 56% and accounted for 42% of Arista’s revenues.

“Reiterate Buy and increase PO to $185 from $175 prior on higher estimates supported by the accelerated momentum,” the analysts added.

Wells Fargo maintained its Overweight rating on Arista and increased the price target on the stock to $185 from $175.

“ANET’s upward CY26 guide justifiably catalyzing shares (+25% y/y; sustainable GM%); providing increased confidence in ANET’s path to >30% y/y growth + $5/sh.+ EPS upside in CY27,” said analysts led by Aaron Rakers.

Related Stocks: Cisco Systems (CSCO) and Astera Labs (ALAB) were largely flat premarket on Friday.

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Shares fell nearly 7% in premarket trading, while other networking stocks, such as Arista Networks (ANET), were fractionally lower.

Bank of America analyst Tal Liani said fourth-quarter estimates look to be “conservative,” as third-quarter revenue guidance was stronger-than-expected at growth of 9.5% year-over-year, compared to estimates of 7.3%. However, stronger hardware growth, a higher cloud mix, and a 400% year-over-year hike in memory prices are hurting gross margins.

“Product price increases could offset this, with Campus switching and compute prices up ~3% recently and additional price increases likely given memory price trends YTD,” Liani wrote in a note to clients. “Management expects the GM pressure to linger near term, but operational efficiencies could offset, leaving [operating margin] intact.”

Nonetheless, Liani, who has a Buy rating and $95 price target on Cisco, said the company is benefiting from both strong hardware and networking cycles.

“The company is well positioned for the Campus refresh cycle, with additional growth in servers, Wi-Fi, and Industrial IoT solutions,” Liani added. “Security is expected to remain weak throughout the year, but healthy demand for newer products like SASE, XDR, and refreshed firewalls is masked by Splunk’s pricing transition, a pressure expected to ease by year-end. With total revenue growth accelerating to 8.5% in 2026, OM stable at 34%, and $6.6B return in capital to shareholders YTD, we find the valuation attractive, trading at ~18.5x forward P/E.”

Evercore ISI analyst Amit Daryanani said the increase in memory costs is “nothing but a speed bump,” given Cisco’s artificial intelligence-related strength. (The company had $2.1B in AI orders in the second-quarter, compared to $1.3B in the previous quarter, and expects more than $5B in fiscal 2026 and more than $3B in revenue).

“Given the recent stock appreciation, the print isn’t enough in the near term as EPS estimates are unlikely to shift higher,” Daryanani wrote in a note to clients. “Structurally, we think CSCO is positioned to see networking acceleration in FY26 and FY27 driven by AI momentum, campus refresh, and Enterprise/Sovereign tailwinds. CSCO should end up seeing $5.00+ EPS in FY27.” He reiterated his Outperform rating and $100 price target on Cisco.

Citi analyst Atif Malik raised his price target slightly, moving to $90 from $85, as he believes in the AI-related momentum.

“While higher memory costs were partly to blame for [gross margins, management] cited a significantly higher hardware mix as the primary culprit,” Malik wrote. “CSCO modestly raised FY26 outlook by 150bps to +8.5% Y/Y on accelerating demand in networking (campus, data center switching). Quarterly AI hyperscale orders picked up to $2.1B and are now expected to be >$5B in FY26 with sales >$3B. While AI sales from neocloud, sovereign, and enterprise are not expected to be material in FY26, Jan-Q orders of $350M were up 75% Q/Q. Security remained a low point, -4% Y/Y. We raise FY26/ FY27 EPS by ~1% /~flat and move TP to $90 on a 20x multiple, vs. 19x prior, to reflect the multiple expansion for AI stocks. Maintain Buy.”

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Here are some of Thursday’s biggest stock movers:

Biggest stock gainers

• Fastly (FSLY) +34% – Shares surged after the content delivery network provider delivered a strong Q4 beat and issued guidance that significantly topped expectations. For Q1, Fastly expects adjusted EPS of $0.07–$0.10 vs. the $0.01 consensus, while revenue is guided at $168M–$174M, comfortably above the $159.6M estimate. Strength carried into the full-year outlook, with adjusted EPS projected at $0.23–$0.29 vs. $0.13 consensus and revenue of $700M–$720M, well ahead of the ~$668M forecast, signaling improving profitability and stronger demand momentum.
• Novocure (NVCR) +31% – Shares soared after the FDA approved Optune Pax for adults with locally advanced pancreatic cancer in combination with gemcitabine and nab-paclitaxel. Approval was backed by the Phase 3 PANOVA-3 trial, which showed a statistically significant overall survival benefit, extending median OS by ~2 months in the intent-to-treat population and over 3 months in treated patients, without added systemic toxicity. The therapy also delayed pain progression and improved quality-of-life measures, marking the first major treatment advance in decades for this patient group.

Biggest stock losers

• QuantumScape (QS) -9% – Shares slid after its latest quarterly results showed no revenue from its core business and a lack of FY2026 revenue guidance or new OEM partnerships, despite a modest profit beat. The company plans to step up investment in scaling its solid-state battery via the Eagle Line, lifting 2026 capex to $40M–$60M from $36.3M in 2025, while offering only broad commercialization goals. Although a 14% cut in operating expenses narrowed the loss to $0.17 per share (slightly better than expected), investors were weighed down by the absence of near-term revenue visibility, with inaugural customer billings totaling $19.5M in 2025.
• Cisco Systems (CSCO) -8% – Shares slipped despite delivering FQ2 results and guidance above expectations, as investors focused on broader demand concerns. For FQ3, Cisco guided sales of $15.4B–$15.6B and adjusted EPS of $1.02–$1.04, both ahead of consensus, with gross margins seen at 65.5%–66.5%. Full-year guidance also topped estimates, with adjusted EPS of $4.13–$4.17 vs. the consensus of $4.13 and revenue of $61.2B–$61.7B vs. the consensus of $60.76B.
• AppLovin (APP) -6% – Shares fell even though the company reported a strong Q4 beat. The company reported GAAP EPS of $3.24 vs. $2.94 expected, while revenue surged 66% Y/Y to $1.66B, topping consensus. The company expects Q1 2026 revenue at $1.745B–$1.775B, well above estimates of $1.7B. It also highlighted aggressive capital returns, repurchasing $481M of stock in Q4 and $2.58B in 2025.

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Management View

• Charles Robbins, Chairman & CEO, stated that “Q2 was a very strong quarter with revenue and earnings per share both growing double digits and coming in above the high end of our guidance ranges.” He highlighted record revenue in Q2, with total revenue growth accelerating to 10% year-over-year and product revenue up 14%, driven by demand for AI infrastructure and Campus networking solutions. Robbins announced an increase to Cisco’s dividend and emphasized the company’s position as a critical infrastructure provider for the AI era.

• Robbins addressed market-wide memory price increases, stating, “Leveraging our industry-leading supply chain team, we are proactively implementing 3 key strategies: First, we have already announced price increases, and we’ll continue to monitor market trends and make additional adjustments as necessary. Second, we are revising contractual terms with channel partners and customers to address evolving component prices. Third, Cisco’s operating scale and industry-leading position help us negotiate favorable terms and secure supply to fulfill current and future demand.”

• Robbins noted, “AI infrastructure orders taken from hyperscalers totaled $2.1 billion in Q2 compared to $1.3 billion just last quarter and equal to the total orders taken in all of fiscal year ’25, marking another significant acceleration in growth across our silicon, systems and optics.” He also stated, “Given the strong demand for our Silicon One systems and optics, we now expect to take AI orders in excess of $5 billion and to recognize over $3 billion in AI infrastructure revenue from hyperscalers in FY ’26.”

• Mark Patterson, Executive VP & CFO, said, “We delivered another strong quarter with record revenue in Q2 and both operating margin and earnings per share coming in above the high end of our guidance. For the quarter, total revenue was $15.3 billion, up 10% year-over-year. Non-GAAP net income was $4.1 billion, up 10% and non-GAAP earnings per share was $1.04, up 11%.” Patterson added, “Given the confidence we have in our business and the strength of our ongoing cash flows, today, we announced that we are raising our dividend by $0.01 to $0.42 per quarter.”

Outlook

• Patterson provided fiscal Q3 guidance: “we expect revenue to be in the range of $15.4 billion to $15.6 billion. We anticipate non-GAAP gross margin to be in the range of 65.5% to 66.5%. Non-GAAP operating margin is expected to be in the range of 33.5% to 34.5%. Non-GAAP earnings per share is expected to range from $1.02 to $1.04.”

• For fiscal year 2026, Patterson stated, “we expect revenue to be in the range of $61.2 billion to $61.7 billion. Non-GAAP earnings per share is expected to range from $4.13 to $4.17.”

Financial Results

• Patterson reported, “Total product revenue was $11.6 billion, up 14% and services revenue was $3.7 billion, down 1% year-over-year. Networking was again the standout with growth of 21%, driven by AI infrastructure and campus refresh.”

• Security was down 4%, reflecting declines in prior generation products and the ongoing transition in the Splunk business from on-premise deals to cloud subscriptions. Collaboration posted solid growth of 6%.

• Total RPO was $43.4 billion, up 5%. Subscription revenue was $7.8 billion, representing 51% of total revenue. Total software revenue was $5.7 billion, up 2%. Non-GAAP gross margin came in at 67.5%. Operating cash flow was $1.8 billion, impacted by a $2.3 billion tax payment.

• Cisco returned $3 billion to shareholders during the quarter, including $1.6 billion in dividends and $1.4 billion in share repurchases.

Q&A

• Amit Daryanani, Evercore ISI: Asked about the AI side’s $5 billion target, the mix between Silicon One and Optics, and the impact of new products. Robbins responded, “the $5 billion that we now have raised our estimates to during fiscal 2026 does not include any of the recently announced P200 products, nor G300, also neither of the Optics solutions that we announced this week at Cisco Live EMEA. We talked about this past quarter, the mix was 60% systems, 40% optics.”

• Tal Liani, BofA Securities: Inquired about networking segment revenue growth and sequential guidance. Patterson said, “across networking, we’re seeing strength, frankly, across the entire portfolio from the Campus to the data center, to the manufacturing floor in terms of our IoT offerings as well.”

• Aaron Rakers, Wells Fargo: Asked about AI networking and scale up opportunities. Robbins stated, “we haven’t made any announcements on scale up. I think in the past, I’ve said we do plan to participate in it, and we expect in the future to have products and revenue from scale-up, but haven’t announced anything.”

• Meta Marshall, Morgan Stanley: Sought clarity on enterprise AI appetite and impact of pricing increases. Robbins explained early enterprise AI use cases and noted, “we really didn’t see anything in the quarter that would point us to evidence that there were any significant pull forwards there at all.”

Sentiment Analysis

• Analysts expressed cautious optimism, focusing on the sustainability of AI-driven growth, gross margin pressures, and execution on new product ramps. Their tone was neutral to slightly positive, seeking clarification on order trends and margin pressures.

• Management exhibited confidence, using phrases like “we feel confident in our ability to manage this industry-wide dynamic better than our peers” and “I have a high degree of confidence that we’re going to deliver our strongest fiscal year yet.” The tone in Q&A remained direct, occasionally reiterating earlier points but maintaining assurance on execution and demand.

• Compared to the previous quarter, analyst sentiment shifted slightly more positive, with greater focus on AI momentum and order acceleration, while management’s confidence was reinforced by higher guidance and product demand.

Quarter-over-Quarter Comparison

• Guidance for full-year revenue and EPS was raised from the prior quarter, with the AI order target moved from doubling prior year to “in excess of $5 billion.”

• Growth rates for product revenue and networking accelerated, reflecting stronger AI infrastructure demand and ongoing campus refresh.

• Management maintained a confident tone regarding execution, emphasizing stronger customer momentum and advancements in AI, while analysts shifted their focus to sustainability of AI-driven growth and margin resilience.

• Strategic priorities remained centered on AI infrastructure, with added emphasis on new product launches and international joint ventures.

Risks and Concerns

• Robbins addressed rising memory prices as a key industry-wide challenge, outlining proactive pricing and supply chain strategies.

• The transition in Splunk’s business model from on-premise to cloud subscriptions was cited as a drag on security revenue growth, although management expressed satisfaction with the long-term benefits.

• Analysts questioned the sustainability of gross margins and the lumpiness of large AI orders, particularly from a concentrated customer base.

Final Takeaway

Cisco management emphasized the company’s record-breaking quarter and strong position in the accelerating AI infrastructure market, citing robust demand, ongoing product innovation, and disciplined financial execution. The outlook for fiscal 2026 was raised, driven by heightened AI orders, expanded product adoption, and confidence in margin management despite cost headwinds. The company reaffirmed its focus on capital returns and strategic investments to capture the multiyear AI and networking refresh opportunity.

Read the full Earnings Call Transcript

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For the period ending Jan. 24, Cisco said it earned an adjusted $1.02 per share as revenue rose 10% year-over-year to $15.35B. Service revenue came in at $3.71B, down 1% year-over-year, while product revenue rose 14% from the year-ago quarter to come in at $11.64B for the period. Adjusted gross margin came in at 67.5% for the period.

Analysts had expected adjusted earnings of $1.02 per share on $15.11B in sales.

Cisco said it ended the period with $43.4B in remaining performance obligations, up 5% year-over-year.

“Cisco’s strong second quarter and first half of fiscal 2026 demonstrate both the power of our portfolio and the fundamental role we continue to play in connecting and protecting customers in a rapidly evolving landscape,” said Chuck Robbins, chair and CEO of Cisco, in a statement. “With over 40 years of customer trust, global scale, and a relentless focus on innovation, we believe Cisco is uniquely positioned to deliver the trusted infrastructure needed to securely and confidently power the AI-era.”

Looking to the third-quarter, Cisco said it expects sales to be between $15.4B and $15.6B, above the $15.2B analysts were expecting. Adjusted earnings are forecast to be between $1.02 and $1.04 per share, above the $1.03 per share estimate. Adjusted gross margins are forecast to be between 65.5% and 66.5%.

For the full-year, Cisco said it expects adjusted earnings to be between $4.13 and $4.17 per share, with the midpoint above the $4.13 per share estimate. Sales are expected to be between $61.2B and $61.7B, above the estimate of $60.76B.

Following Cisco’s results, competitor Arista Networks (ANET) fell in sympathy.

Cisco also upped its quarterly dividend to $0.42 per share.

The company will host a conference call at 4:30 p.m. EST to discuss the results.

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