Cisco and Applied Materials Raise Outlooks as AI Spending Holds Up
Cisco Systems and Applied Materials both raised their outlooks on Thursday after reporting quarterly results that beat Wall Street estimates, offering fresh evidence that spending on artificial intelligence infrastructure is still growing, even as Nvidia’s leadership shake-up rattled chip stocks during the regular session.
Cisco lifts its full-year forecast
Cisco said revenue for its fiscal first quarter, which ended on 24 October, was $18.5 billion, up 24 per cent from a year earlier. Product revenue rose 32 per cent, while services revenue rose 1 per cent. Non-GAAP earnings per share were $1.40, up 40 per cent, and GAAP earnings per share were $1.14. The revenue figure topped the average analyst estimate of $18.14 billion compiled by LSEG, according to Reuters. The figures come from Cisco’s first-quarter earnings release, filed with the US Securities and Exchange Commission.
The outlook drew the most attention. Cisco raised its fiscal 2027 revenue forecast to between $74.8 billion and $75.8 billion, from $72.2 billion to $73.4 billion, and lifted its non-GAAP earnings forecast to $5.47 to $5.53 per share. It also raised its expectation for AI infrastructure revenue from hyperscalers to $9 billion in fiscal 2027, from $7.5 billion — a figure the company said is more than double the fiscal 2026 total.
For the second quarter, Cisco guided to revenue of $18.0 billion to $18.2 billion and non-GAAP earnings of $1.34 to $1.36 per share. Chief executive Chuck Robbins said the company is in “the very early stages of a multi-year networking supercycle”. Remaining performance obligations, a measure of contracted future revenue, were $46.2 billion, up 8 per cent, and the board declared a quarterly dividend of 42 cents a share. Reuters said Cisco shares were little changed in extended trading.
Applied Materials beats and guides higher
Applied Materials, which supplies wafer-fabrication equipment to chipmakers, reported fourth-quarter revenue of $10.41 billion, above the $10.30 billion analyst average, according to Reuters. Adjusted earnings were $4.16 a share, against an expected $4.06.
The company forecast first-quarter revenue of about $11.10 billion, plus or minus $500 million, compared with an estimate of $10.89 billion. Its earnings guidance of $4.15 to $4.55 a share straddled the $4.21 consensus, with the low end sitting below it. Reuters said the shares rose about 3 per cent in extended trading.
A calmer read on AI demand
The two reports landed on a tense day for technology shares. Nvidia fell 4.3 per cent after chief executive Jensen Huang stepped down, while Broadcom and AMD rose as investors bet that Nvidia’s troubles could benefit rivals. US stocks closed lower overall, with energy shares providing some offset as oil prices jumped. The yield on the 10-year Treasury rose to about 5.10 per cent, a level that pressures valuations.
Cisco and Applied Materials sell into the same buildout from different directions: one supplies the networking that connects data centres, the other supplies the machines that make the chips. Their guidance is therefore a useful read on whether customers’ spending plans survived last week’s sell-off in AI stocks.
What to watch next
Investors will watch how the two stocks open on Friday after the muted and modestly positive after-hours reactions, whether analysts lift estimates for AI networking and chip equipment, and Nvidia’s results on Tuesday, 17 November, which will give another view of data-centre demand. Friday’s producer price data will also be in focus, with the 10-year Treasury yield near 5.13 per cent.
Frequently asked questions
Why did Cisco raise its outlook?
Cisco raised its fiscal 2027 revenue forecast after first-quarter revenue grew 24 per cent to $18.5 billion, beating estimates, and it lifted its expected AI infrastructure revenue from hyperscalers to $9 billion.
What did Applied Materials forecast?
Applied Materials forecast first-quarter revenue of about $11.10 billion, plus or minus $500 million, above the $10.89 billion estimate, with adjusted earnings guidance of $4.15 to $4.55 a share.
