Cisco Raised Its AI Order Target to $9 Billion. Here's What Investors Need to Know.

Cisco Systems (NASDAQ: CSCO) has quietly become one of the year's big artificial intelligence (AI) trades. Shares of the networking giant closed Tuesday at $121.74, up 5% on the day and about 60% higher in 2026 as of this writing. That leaves it about 7% shy of its 52-week high ($130.37) -- for a company whose revenue grew 5% last fiscal year.

The number doing most of the work is $9 billion. That's how much in AI infrastructure orders Cisco now expects to take from hyperscalers (the giant cloud companies building AI data centers) in fiscal 2026, a target it raised from $5 billion on its fiscal third-quarter earnings call in May.

So, with shares priced like a growth stock again, how much growth can $9 billion of orders actually buy?

Image source: Getty Images.

The order book is moving fast

Cisco took $1.9 billion of AI infrastructure orders from hyperscalers in its fiscal third quarter (the period ended April 25), more than triple the $600 million it took a year earlier. That brought the year-to-date total to $5.3 billion, which already exceeded the company's full-year expectation of $5 billion with a quarter still to go.

Hence the new target of about $9 billion for the full fiscal year -- 4.5 times the roughly $2 billion of such orders Cisco booked in all of fiscal 2025. And fiscal 2025's total had itself doubled the company's original $1 billion target.

I think those numbers hold up to a hard look, and the order growth is broad. Cisco's Acacia optics business, which makes high-speed optical connections for data centers, had its strongest quarter to date, taking more than $1 billion of orders in the fiscal third quarter. Management said the business was on track to grow more than 200% year over year in fiscal 2026.

The quarter was strong beyond the order book as well. Revenue climbed 12% from a year earlier, hitting a record $15.8 billion, and non-GAAP (adjusted) earnings per share came in at $1.06, up 10%. Both figures topped the high end of the company's guidance.

What the math says about growth

But orders are not revenue. Cisco expects to recognize only about $4 billion of AI infrastructure revenue from hyperscalers in fiscal 2026. The rest converts later. Against full-year guided revenue of $62.8 billion to $63.0 billion, that's about 6% of the total.

Zoom out, and the company guided for fiscal 2026 revenue growth of about 11% over fiscal 2025's $56.7 billion. That's a clear step up for a company that grew 5% the year before, and AI orders are a big part of the reason.

In other words, the rest of Cisco's business (campus networking, cybersecurity, collaboration, service provider gear) still sets the base rate. A $9 billion year of orders, converting over time, can lift a $63 billion company's growth from mid-single digits to low double digits. It can't make a company this size grow like a pure AI supplier.

Earnings tell a similar story. Cisco guided for full-year adjusted earnings per share between $4.27 and $4.29, up about 12% from fiscal 2025.

Yet the stock trades at about 26 times forward earnings. And the dividend, at $1.68 per share annually, now yields about 1.4% -- roughly half what it yielded at the stock's 52-week low.

For that multiple to make sense, the AI order book has to keep compounding well past fiscal 2026, and the conversion of those orders into revenue has to stay on schedule. That could happen. The order growth says the demand is there.

Investors won't wait long to find out. Cisco's fiscal year ended in late July, so the $9 billion target is no longer a forecast with quarters left to run. It's a result waiting to be revealed, and the company reports its fiscal fourth quarter next Wednesday, Aug. 12.

So, should investors buy the stock after a run like this? I like what Cisco's order book says about demand, and an 11% growth year from this company is arguably a bigger change than it sounds. But at 26 times forward earnings for a business still guided to grow revenue about 11%, I'd want to see the $9 billion confirmed and hear the fiscal 2027 outlook before paying up. The report lands Wednesday. I can wait a few days.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems. The Motley Fool has a disclosure policy.