Cisco's Q1 fiscal revenue increased by 8% year-on-year, with a significant growth in AI-related orders, raising the full-year performance guidance, and the stock price rose over 7% in after-hours trading | Earnings Report Insights

Cisco released an impressive financial report, with AI narratives accelerating realization, and the stock price surged over 7% after hours.

On November 12, Cisco announced its financial results after the U.S. stock market closed, reporting first-quarter revenue of $14.88 billion, an 8% year-over-year increase, and a non-GAAP earnings per share of $1.00, up 10%, both exceeding Wall Street expectations. This marks the company's fourth consecutive quarter of revenue growth. Specific performance details include:

Financial Performance:

• Q1 revenue of $14.88 billion, an 8% year-over-year increase; non-GAAP earnings per share of $1.00, a 10% year-over-year increase, both exceeding the upper guidance limit;
• Q2 revenue guidance of $15.0-15.2 billion, surpassing market expectations of $14.6-14.7 billion; full-year revenue guidance raised to $60.2-61.0 billion;
• GAAP gross margin of 65.5%, non-GAAP operating margin of 34.4%, both above the guidance range.

Core Business Progress:

• Product orders increased by 13% year-over-year, with network product orders achieving double-digit growth for the fifth consecutive quarter;
• AI infrastructure orders reached $1.3 billion, significantly accelerating from $800 million in the previous quarter;
• The campus network business has initiated a multi-year, multi-billion dollar upgrade cycle, with new generation products growing faster than before;
• Security business revenue declined by 2% to $1.98 billion, and collaboration business declined by 3% to $1.06 billion, both falling short of expectations.

Development Strategy:

• Focus on upgrading AI network equipment, launching new Ethernet switches based on NVIDIA chips;
• Strengthening software and security business through the $28 billion acquisition of Splunk, seeking business diversification;
• Focusing on profitable growth, capital returns, and strategic investments.

As of Wednesday's close, Cisco's stock price has risen 25% year-to-date. Following the report's release, Cisco's stock price rose over 7% after hours.

AI Narratives Accelerating Realization

The biggest highlight of this quarter is undoubtedly the AI infrastructure orders.

AI infrastructure orders from hyperscale customers reached $1.3 billion, showing "significant acceleration" compared to $800 million in the previous quarter.

This proves that Cisco is not completely absent in the AI wave; the company is better connecting server racks and data centers to handle complex AI tasks through upgrades in chips and network equipment.

Last month, Cisco launched new Ethernet switches based on NVIDIA chips, attempting to secure a position in competition with rivals such as Broadcom and Huizhi, which acquired Juniper. CFO Mark Patterson emphasized in the financial report:

Our relevance in the AI field continues to strengthen, with multi-year, multi-billion dollar campus upgrade opportunities now underway.

The network business indeed performed strongly, with revenue growing 15% to $7.77 billion, exceeding analysts' expectations of $7.47 billion. Product orders increased by 13% year-over-year, with network product orders achieving double-digit growth for the fifth consecutive quarter All technology categories of campus networks (switching, routing, wireless, and IoT) experienced accelerated growth in Q1, with the growth rate of next-generation solutions including smart switches, secure routers, and WiFi 7 products surpassing that of previous product releases