Cisco Systems Inc (NASDAQ:CSCO, XETRA:CIS) is set to report quarterly results after the market close on August 12, with UBS expecting the networking equipment maker to deliver revenue and earnings above consensus estimates, supported by accelerating demand for AI infrastructure and resilient campus networking spending.
UBS wrote that industry checks and commentary from hyperscale cloud providers and neocloud companies indicate demand for AI infrastructure strengthened over the past three months, supporting upside to both networking revenue and product orders in the July quarter.
The analysts expect networking revenue to exceed its forecast of $9.6 billion, which would represent 26% year-over-year growth, while product orders could also outperform expectations following strong demand for AI-related systems and optical products. UBS currently forecasts product order growth of 29% for the quarter after a 35% increase in the prior quarter.
The firm noted that strength in pluggables and networking systems, following more than $1 billion of Acacia orders last quarter, could provide an additional boost to orders.
While UBS sees revenue skewing to the upside, it expects elevated component costs to limit gross margin expansion to around 66%. Even so, the brokerage believes adjusted earnings per share could reach $1.19, above its own estimate of $1.16 and the Visible Alpha consensus of $1.17.
Looking ahead, UBS expects Cisco's guidance for the October quarter to come in above its current forecasts. The brokerage estimates October-quarter revenue of $16.24 billion, but believes the company could guide to a range of $16.6 billion to $16.8 billion, reflecting roughly 12% year-over-year growth as revenue from recent AI-related hyperscaler design wins becomes more heavily weighted toward the second half.
UBS also expects Cisco to issue a fiscal 2027 revenue outlook of $68 billion to $69 billion, supported by more than $2 billion of incremental AI-related revenue, taking total AI revenue above $6 billion. The brokerage forecasts fiscal 2027 adjusted earnings guidance of $4.78 to $4.84 per share, broadly in line with consensus expectations.
The firm said demand has improved across Cisco's business, with product orders strengthening in both AI infrastructure and campus networking. Although it expects order growth to moderate from the previous quarter due to tougher comparisons and the timing of hyperscaler deployments, UBS said recent industry checks remain positive.
UBS maintained a $132 price target on Cisco, above current levels of about $122, arguing the company's premium valuation is supported by its AI networking, silicon and optical portfolio, as well as durable demand for campus networking equipment. The firm added that a recovery in the company's security business during fiscal 2027 could provide an additional tailwind.