Cisco’s Hidden Security Boom: Why 9% Growth Doesn’t Tell the Whole Story

Key points:

• Cisco’s fourth-quarter and fiscal-year 2025 earnings showed a solid "beat and raise" with quarterly revenue of $14.67 billion and non-GAAP EPS of $0.99.
• The company’s security growth of 9% is misleadingly low, as the new products such as XDR, SSE, and Hypershield are growing at 20%, which puts Cisco in line or ahead of many of its pure-play competitors.
• Cisco’s AI infrastructure is ahead of plan, with over $800 million in orders from webscale customers in the fourth quarter, and the company expects to see a major refresh cycle in campus upgrades driven by the growth of AI.

According to sources, Cisco has announced its fourth-quarter and fiscal-year 2025 earnings, showing a solid "beat and raise" with quarterly revenue of $14.67 billion and non-GAAP EPS of $0.99. This is a significant achievement for the company, which has been working to transition its business and invest in new products and technologies. One of the key takeaways from the quarter is the security growth of 9%, which may seem low at first glance. However, as CEO Chuck Robbins explained, this growth is misleadingly low because it includes the older, legacy products, which are not a big focus for investment. The new products, such as XDR, SSE, and Hypershield, are growing at 20%, which puts Cisco in line or ahead of many of its pure-play competitors.

Another important area of growth for Cisco is AI infrastructure. The company reported over $800 million in AI infrastructure orders from webscale customers in the fourth quarter, bringing the total for 2025 to over $2 billion. This is a significant milestone for Cisco, which has been working to develop its AI capabilities and partner with companies like Nvidia. The company’s success in this area is critical, as it will drive growth and adoption of AI technologies. Cisco has also developed a partnership with Nvidia and is the only company to have its silicon integrated into the GPU maker’s Spectrum-X product.

The growth of AI will also drive campus upgrades, as the traffic generated by AI agents will require higher performing wired and wireless networks. This will be a major opportunity for Cisco, which has recently introduced its Smart Switches with integrated security. The company expects to see a major refresh cycle in campus upgrades, which will drive growth and adoption of its products. Additionally, the integration of Splunk data across Cisco’s products will provide a continuous stream of innovation and help customers make better decisions.

However, there is a looming uncertainty, and that’s the ever-changing tariffs issue. Newly appointed CFO Mark Patterson talked about this with respect to forward-looking guidance, saying that "while we have some clarity on tariffs, we are still operating in a complex environment." This is a significant challenge for Cisco, which will need to navigate the complexities of tariffs and trade policies. Despite this challenge, the company is well-positioned for growth, with a world-class supply chain and a strong portfolio of products and technologies. As the company continues to transition and invest in new areas, investors can expect consistent and steady growth, rather than a "big bang" moment. With its strong financial position and commitment to innovation, Cisco is poised for long-term success and growth. The company’s ability to drive growth and adoption of AI technologies, combined with its strong portfolio of products, makes it a leader in the industry.

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