Cisco Systems (CSCO)

Enterprise networking + security incumbent (Cisco) — broad network/security + AI data-center push

AI exposure 18% — derived from reported segment revenue, not asserted.

Where it sits

Connectivity → Network Switching & Hardware · figures rebased to Q4 FY2026, reported 2026-08-12

Switching, enterprise routing, Internet infrastructure, AI data-center networking… leads 2 businesses in this sub-tier that together are 78.8% of revenue, so Network Switching & Hardware is effectively the whole company rather than one leg of it. The rest is tagged separately: Cybersecurity at 12.9%; Data & Infrastructure Software at 1.6%.

Also tagged: emerging in Software Stack → Cybersecurity; emerging in Software Stack → Data & Infrastructure Software.

Reported segments

• Networking — 56.8% of revenue
• Services — 22% of revenue
• Security — 12.9% of revenue
• Collaboration — 6.8% of revenue
• Observability — 1.6% of revenue

Cisco ($17.3B Q4 FY2026, +18% YoY; FY2026 $63.3B, +12%; FY2027 guided $72.2-$73.4B). Q4 mix: Networking 56.8% ($9.791B, +28%) = primary B3 switching/routing/AI fabric on Silicon One and Acacia optics; Services 22.0% ($3.793B, flat) on the installed base; Security 12.9% ($2.226B, +14%) = B5 Cybersecurity, doubled by the $28B Splunk deal; Collaboration 6.8% ($1.167B, +12%) off-map; Observability 1.6% ($275M, +6%) = B5 Data & Infrastructure Software. AI infrastructure orders were $9.3B in FY2026 against $2B in FY2025, with $7.5B of revenue expected in FY2027. Bridge company - hardware plus…

How the 18% is built

• Networking — 56.8% of revenue × 25% AI-driven (estimate). AI data-center switching, Silicon One and Acacia optics — $7.5B of AI infrastructure revenue guided for FY2027 against a $72.2-$73.4B total, plus AI-readiness spend in the enterprise refresh
• Services — 22% of revenue × 15% AI-driven (estimate). Support and advisory attach to the installed base, so the AI-linked share trails the hardware it sits on
• Security — 12.9% of revenue × 5% AI-driven (estimate). Splunk, SASE and Hypershield are largely independent of AI infrastructure demand; a small slice secures AI workloads
• Collaboration — 6.8% of revenue × 0% AI-driven (estimate). Webex and collaboration devices — no AI infrastructure linkage
• Observability — 1.6% of revenue × 10% AI-driven (estimate). ThousandEyes and AppDynamics monitor AI-era infrastructure alongside everything else

Investment read

Moat. Enterprise-networking installed base plus security and Splunk observability on a large services annuity - and the AI data-centre business is now delivered rather than promised: $9.3B of AI infrastructure orders in FY2026 against $2B in FY2025, about $4B recognised as revenue, and $7.5B expected in FY2027 on Cisco's own Silicon One switching and Acacia coherent optics. Product orders rose 35% YoY in Q4, and 25% excluding hyperscalers, so the breadth is real too.

Bottleneck / pricing power. Moderate pricing power from installed base and spec lock-in. Non-GAAP gross margin of 66.3% in Q4 FY2026 is top of the networking group, but it is being held rather than expanded - memory-cost inflation could not be fully passed through, and the AI hardware Cisco is winning carries a lower margin than the software it displaces. That mix, not the order book, is what the reaction session priced.

Role in the AI stack. The enterprise-networking + security incumbent layer.

Connected companies

• Broadcom (AVGO) — CSCO is supplied by: Tomahawk/Jericho switch silicon into Cisco systems
• Marvell Technology (MRVL) — CSCO is supplied by: networking silicon + custom components
• Microsoft (MSFT) — CSCO supplies: Silicon One/8000 switching into hyperscale (SONiC, Azure-endorsed) + enterprise networking incumbency
• Equinix (EQIX) — CSCO supplies: networking hardware into colocation facilities
• Corning (GLW) — CSCO is supplied by: optical fiber for networking infrastructure
• Keysight Technologies (KEYS) — CSCO is supplied by: network test & validation for switching/routing R&D
• Viavi Solutions (VIAV) — CSCO is supplied by: network test, monitoring & assurance for equipment makers
• Arista Networks (ANET) — CSCO competes with: Data-center switching — ANET ~28% high-speed share, CSCO broader enterprise; head-to-head 100-800G
• Ciena (CIEN) — CSCO competes with: Optical transport / coherent systems (Ciena WaveLogic vs Cisco/Acacia)
• Nokia (NOK) — CSCO competes with: IP routing + data-center networking — Nokia vs Cisco
• Hewlett Packard Enterprise (HPE) — CSCO competes with: enterprise/data-center networking — HPE (Juniper) vs Cisco
• Ubiquiti (UI) — CSCO competes with: enterprise WLAN/switching — Ubiquiti (SMB, no-subscription) vs Cisco
• Palo Alto Networks (PANW) — CSCO competes with: cybersecurity — Cisco (Splunk/SASE/Hypershield) vs PANW
• CrowdStrike (CRWD) — CSCO competes with: overlap mainly in SIEM/XDR (Splunk vs Falcon Next-Gen SIEM); Cisco is not an endpoint rival to CrowdStrike

Others in Network Switching & Hardware

• Arista Networks (ANET)
• Ciena (CIEN)
• Ubiquiti (UI)
• Astera Labs (ALAB)

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