If you've been wondering whether the AI boom is real or just hype, Cisco's latest earnings report offers a pretty clear answer. The networking giant's stock surged to a 52-week high in premarket trading Thursday after it delivered a third-quarter beat, raised its full-year guidance, and revealed that demand for AI infrastructure is absolutely exploding.

Let's start with the numbers. For its fiscal third quarter, Cisco (CSCO) reported revenue of $15.84 billion, comfortably above the $15.56 billion analysts were expecting. Adjusted earnings came in at $1.06 per share, also ahead of the $1.03 consensus. Not bad for a company that some had written off as a boring old networking hardware vendor.

Annual recurring revenue ticked up 2% year over year to $31.2 billion, with product ARR growing 4%. Adjusted gross margin dipped to 66%, down 260 basis points from a year ago, which Cisco attributed to product mix shifts and higher memory costs. The company ended the quarter with $16.6 billion in cash and investments — a nice cushion for whatever comes next.

Customer Growth and the Subscription Shift

Cisco added more than 1,000 new customers during the quarter across products like Secure Access, XDR, HyperShield, and AI Defense. Since launching those offerings, the total customer base has grown to about 5,000. Subscription revenue hit $7.8 billion, representing 49% of total quarterly revenue — a sign that Cisco's push toward recurring revenue models is gaining traction.

AI Infrastructure Is the Star of the Show

The real headline here is AI. Product revenue climbed 17% year over year to $12.1 billion, fueled by AI infrastructure, campus networking, data center switching, and wireless products. Total product orders surged 35% from a year earlier. Even excluding hyperscaler customers, orders were up 19%, driven by enterprise and public sector spending.

Orders from service provider and cloud customers more than doubled, jumping 105% year over year, with five major hyperscalers posting triple-digit growth. Enterprise orders rose 18%, and public sector orders increased 27%, with double-digit gains across all regions. Networking product orders alone rose more than 50%, led by triple-digit growth in service provider routing and compute, plus double-digit growth in data center switching, campus switching, wireless, enterprise routing, and industrial IoT.

But the most eye-popping number? AI infrastructure orders from hyperscalers reached $1.9 billion in the quarter, up from just $600 million a year ago. Year-to-date, AI infrastructure orders total $5.3 billion — that's already above Cisco's prior full-year target of $5 billion, with one quarter still to go. The company now expects total AI-related orders to hit $9 billion in fiscal 2026, nearly double its earlier forecast.

Restructuring to Double Down on AI and Cybersecurity

Cisco also announced a restructuring plan aimed at redirecting investments toward silicon optics, AI, and cybersecurity. The company expects to incur up to $1 billion in pre-tax restructuring charges and plans to cut nearly 4,000 jobs. It's a classic case of shifting resources from slower-growing areas to where the demand is — and right now, that's hyperscale cloud and AI infrastructure.

Guidance Gets a Big Upgrade

For the fiscal fourth quarter, Cisco forecast revenue of $16.7 billion to $16.9 billion, well above the $15.82 billion analysts were looking for. Adjusted earnings are expected to be $1.16 to $1.18 per share, versus the $1.07 consensus. For the full fiscal year 2026, Cisco raised its revenue guidance to $62.8 billion to $63 billion, up from $61.2 billion to $61.7 billion. Analysts had been expecting $61.6 billion. Full-year adjusted earnings guidance was lifted to $4.27 to $4.29 per share, from $4.13 to $4.17, compared to the $4.16 analyst estimate.

Cisco also said it expects to recognize about $4 billion in AI infrastructure revenue during fiscal 2026.

Acacia Optics: A Record Quarter

One more highlight: Cisco's Acacia optics business posted a record quarter with more than $1 billion in orders. Management expects the segment to grow more than 200% year over year in fiscal 2026. That's the kind of growth that makes you sit up and take notice.

Stock Performance

Shares of Cisco were up 16.77% in premarket trading Thursday at $118.95, hitting a new 52-week high. It's a reminder that even established tech companies can find new life when they ride the right wave — and right now, AI is a tsunami.