Cramer Calls Cisco Plunge a Buy as AI Orders Surge

Cisco shares plunged roughly 9% on Thursday after the networking giant posted a record quarter and guided higher, yet Jim Cramer told Mad Money viewers the drop is a buying opportunity. Management’s habit of starting the fiscal year with conservative numbers, he argued, is masking strength in AI, security and data-center demand.

The reaction turned a clean beat into one of the sharpest single-day moves for the mega-cap this year. Investors who had piled in on the AI networking story watched the stock give back a chunk of its more than 60% year-to-date gain.

That gap between the print and the tape is the whole story. Orders, revenue and the AI backlog all pointed up. The opening guide and a softer gross-margin line gave sellers a reason to act anyway.

The Quarter Wall Street Still Sold

Cisco reported fiscal fourth-quarter revenue of $17.3 billion, up 18% year over year and ahead of the roughly $16.8 billion Wall Street expected. Non-GAAP earnings hit $1.22 per share versus the $1.17 consensus. Full-year revenue reached $63.3 billion, up 12%.

Product orders jumped 35% in the quarter, with networking orders up 40% for the eighth straight double-digit growth period. The company called it a networking supercycle. Cash from operations ran $5.4 billion in the quarter.

Yet the stock opened near $124 and traded as low as the low $112s before settling around $113. Prior to the print the shares had climbed more than 60% in 2026 and touched a record close near $130 in June.

On a single session the tape erased a slice of that re-rating even though every major top-line and order metric cleared the bar. The selloff priced the guide and the margin mix, not the backlog.

Cramer Sees the Sandbag, Not the Crack

CNBC’s Jim Cramer said investors should not automatically sell a stock that falls on conservative guidance when management has a track record of underpromising and overdelivering. He framed Cisco’s pullback as that exact setup.

Cisco is much better than expected and is very conservative at the start of the new fy…always.

Cramer told holders the guidance conservatism, not a broken quarter, explained the move. He pointed to demand across AI infrastructure, security and data-center networking as the real story underneath the numbers.

CEO Chuck Robbins struck the same prudent tone in a CNBC interview. “We had a record year, we had a record quarter,” he said. Analysts asked why the guide looked light. “We’re starting a new fiscal year. We’re operating in incredible markets. But it’s also a time that we’re going to start the year being a little bit prudent.”

That language is familiar to long-time Cisco watchers. New fiscal years often begin with cautious ranges that the company later raises as orders convert.

Cramer’s read hangs on that pattern holding again. If the opening ranges are a floor rather than a ceiling, the post-print drop simply resets the entry for a story the order book already supports.

AI Orders That Redefined the Backlog

The AI numbers gave Cramer his ammunition. Hyperscalers placed $4 billion of AI infrastructure orders in Q4 alone. That lifted the full-year total to $9.3 billion, roughly 4.5 times the prior year.

• $4 billion AI infrastructure revenue recognized in FY 2026
• $7.5 billion expected AI infrastructure revenue from hyperscalers in FY 2027
• Networking product orders +40% year over year in Q4
• Total product orders +35% (still +25% excluding hyperscalers)

Cisco said it expects the hyperscaler AI revenue line to nearly double. Management described significant momentum and raised expectations for that business. The official release highlighted record Q4 revenue of $17.3 billion alongside the AI order surge and double-digit growth across every geography and customer market.

Campus networking orders grew more than 15%. Data-center switching topped 25%. The breadth mattered as much as the hyperscaler spike.

Excluding the cloud giants, product orders still rose 25%. That detail undercuts the idea that one customer set carried the entire print. The supercycle label rests on campus, data-center and security demand moving together, not on a single spike.

Why the Guidance Still Looked Light

For the current quarter Cisco guided revenue to $18.0-$18.2 billion, well above the prior street average near $16.8 billion. Full-year FY 2027 revenue is pegged at $72.2-$73.4 billion. Non-GAAP EPS is seen at $5.05-$5.11 for the year and $1.32-$1.34 for Q1.

Piper Sandler called the quarter solid but wrote that guidance “looks conservative given the current demand environment.” The firm said some investors may begin to “nitpick that we’re seeing peak growth” and rated the stock a hold.

KeyBanc stayed more constructive, pointing to likely share gains as hyperscalers lift capital spending and neoclouds ramp. Gross margins did compress: non-GAAP total gross margin fell to 66.3% from 68.4% a year earlier, reflecting a richer mix of lower-margin hyperscaler hardware and higher memory costs. Operating margin still expanded to 35.9% non-GAAP on tight expense control.

That mix shift became one of the post-print talking points on X and trading desks. Several traders described the selloff as an overreaction to temporary margin optics and a crowded long base after the 60%+ run, not a demand problem.

The two margin lines pulled in opposite directions. Gross margin gave skeptics a headline. Operating margin gave bulls proof that cost discipline was absorbing the mix shift.

Crowded Longs Meet a Classic Tech Pattern

Mega-cap tech names that beat and still fall have become familiar. The same dynamic hit UPS beat and raised guidance then watched shares slide earlier in the cycle. Large holders who rode Cisco’s AI re-rating simply took profits when the guide failed to blow the doors off.

Volume was heavy. The stock printed long wicks, suggesting two-way interest rather than pure capitulation. Forward multiple compressed into the low-20s range on non-GAAP numbers, cheaper than many pure-play AI names and the broader market.

Cisco also kept returning capital. It declared a $0.42 quarterly dividend and bought back about 13 million shares in the quarter for $1.5 billion. Remaining buyback authorization sits at $8.1 billion. Operating cash flow for the year was $14.2 billion.

On the Street and on X, Fast Money voices and independent traders floated buy calls into the weakness. One detailed thread framed the drop as a shakeout of weak hands using the gross-margin dip as cover while operating leverage and the AI backlog stayed intact.

1. June 2026: Shares touched a record close near $130 after the more than 60% year-to-date run.
2. Thursday open: Stock opened near $124 on the post-earnings tape.
3. Intraday low: Price traded as low as the low $112s as crowded longs lightened.
4. Session settle: Shares finished around $113, a roughly 9% air pocket on a beat-and-raise print.

That path is a classic crowded-long unwind. The fundamental tape was fine. Positioning and a guide that refused to sprint did the damage.

Cash Flow Still Funds the Buyback Case

Capital return did not pause when the stock sold off. The $0.42 quarterly dividend, the $1.5 billion spent on roughly 13 million shares, and the $8.1 billion still authorized all rest on the same cash engine that produced $5.4 billion from operations in the quarter and $14.2 billion for the full year.

Those figures matter for holders who care about downside support as much as upside torque. A company guiding mid-teens revenue growth at the FY 2027 midpoint while still generating double-digit billions in operating cash can keep shrinking the share count without starving the network buildout.

The low-20s forward multiple on non-GAAP earnings is the other side of that coin. After the pullback, Cisco screens cheaper than many pure-play AI names even though hyperscaler orders and the broader networking supercycle are what re-rated the stock in the first place.

• $5.4 billion operating cash flow in Q4
• $14.2 billion operating cash flow for the full year
• $1.5 billion returned via buybacks in the quarter
• $8.1 billion remaining buyback authorization
• $0.42 quarterly dividend still in force

None of that capital-return stack depends on the gross-margin line snapping back in a single quarter. It depends on orders converting and expenses staying tight, the same two threads Robbins and the finance team already stressed.

How the Order Book Feeds Next Year

The bridge from this print to next year’s guide is straightforward on the numbers already disclosed. Hyperscalers alone built a $9.3 billion AI order pile across FY 2026, including $4 billion in Q4. Management expects about $7.5 billion of hyperscaler AI infrastructure revenue in FY 2027, nearly double the $4 billion recognized in FY 2026.

That conversion math is why Cramer and the constructive desks treat the opening FY 2027 ranges as sandbagging rather than a demand break. Revenue guided at $72.2-$73.4 billion implies roughly 15% growth at the midpoint off the $63.3 billion just delivered. Q1 alone is pegged at $18.0-$18.2 billion, already clear of the old street mark near $16.8 billion.

Security and observability deals closed in the quarter widen the portfolio around that core networking stack. Robbins cast the pitch as secure networking for customers deploying AI however or wherever they decide. CFO Mark Patterson added that productivity on revenue, non-GAAP operating margin and earnings per employee hit the highest marks in 30 years.

Breadth outside the cloud cohort still supports the supercycle frame. Networking product orders up 40%, campus orders up more than 15%, data-center switching up more than 25%, and product orders still up 25% with hyperscalers stripped out all point to a multi-surface cycle, not a one-customer spike.

What Holders Are Buying Now

At these levels the bull case rests on conversion of the $9.3 billion AI order book into the guided $7.5 billion of hyperscaler revenue next year, plus continued double-digit networking growth outside the cloud giants. Security and observability acquisitions closed in the quarter add portfolio breadth.

Robbins emphasized the company’s position in secure networking for customers deploying AI “however or wherever they decide.” CFO Mark Patterson pointed to the highest productivity metrics in 30 years on revenue, non-GAAP operating margin and earnings per employee.

Skeptics worry the networking supercycle peaks or that gross-margin pressure lingers as memory costs stay elevated. The stock’s prior run left little room for anything less than a blowout raise. Yet Cisco has repeatedly turned cautious opening guides into later upward revisions.

The roughly 9% air pocket also echoes other sharp mega-cap resets. IBM stock suffered its worst trading day in decades on its own guidance disappointment, only to stabilize once the longer demand picture reasserted itself.

Cramer’s wager is that history repeats: conservative language at the start of the year, followed by execution that beats the low bar while AI infrastructure keeps compounding. For investors who already missed the first 60% leg, the post-earnings plunge reopened the door at a lower entry point.

Piper Sandler’s hold and peak-growth caution remain the bear checklist in one place. KeyBanc’s share-gain thesis and the still-expanding 35.9% operating margin remain the bull checklist. The tape chose the former on day one. The order book still argues for the latter over the next several quarters.

Cisco closed the session well off its highs but still up sharply for the year. The next several quarters will show whether the sandbag was just prudence or something more lasting. The order book and the operating leverage give the bulls the cleaner near-term facts.