Cisco's networking engine and AI orders keep the quarter strong - here's how to sell into it
Cisco leaned on its core networking portfolio and AI infrastructure momentum to post another beat-and-raise quarter. Networking revenue jumped 21% year over year in the latest fiscal Q2, marking a sixth straight quarter of double-digit growth after the company reorganized product teams under Chief Product Officer Jeetu Patel.
Growth was broad: service provider routing, data center switching, campus switching, wireless, servers, and industrial IoT all moved. Next-gen campus gear is ramping faster than prior launches, and built-in AI features are pulling forward refresh cycles. A massive installed base of early Catalyst generations is nearing end of support, setting up a multi-year, multibillion-dollar refresh runway.
AI is a clear tailwind. Hyperscaler AI infrastructure orders grew from $1.3 billion to $2.1 billion quarter over quarter, already matching total orders placed for fiscal 2025. The mix remains about 60% systems and 40% optics.
What this means for sellers
- Lead with the refresh narrative: end-of-support Catalyst fleets → lower risk, better performance, AI-ready networks.
- Prioritize campus switching, routing, and wireless upgrades where AI workloads are hitting the edge.
- Tie outcomes to AI initiatives, onshoring, and industrial IoT - budget is available when the network blocks progress.
- Bundle optics and systems with clear upgrade paths to protect today's investment against tomorrow's AI demands.
Splunk integration: cloud shift drags revenue, but it's a land-and-expand moment
Splunk is moving faster to cloud subscriptions than planned, creating a near-term drag on reported revenue through the second half of fiscal 2026. Cisco expected a 50/50 split between cloud and on-prem; it's now closer to two-thirds cloud.
For sales, this is not a problem - it's a model shift. Focus on multiyear cloud deals, usage expansion, and security/observability tie-ins. Set expectations early with finance buyers on cash flow and recognition; keep the business case on time-to-value and lower operational overhead.
- Target on-prem Splunk bases with funded migration offers and adoption plans.
- Attach observability and security use cases that drive measurable incident reduction and MTTR improvements.
- Position consumption flexibility for uncertain workloads; add success milestones to reduce perceived risk.
Co-packaged optics (CPO): interest is real, timelines aren't
Leadership sees CPO as imminent, but customers still want choice and multivendor flexibility by keeping optics and silicon decoupled. Broad industry sentiment matches: the tech is compelling for lower power and better interconnects, but broad deployment isn't locked in yet.
- Don't sell dates. Sell a roadmap with upgrade paths and trade-up protections.
- Lead with current optics and systems that meet today's power/latency targets; engage advanced customers in pilots.
Memory shortage: Cisco's three-pillar playbook (and how to use it in deals)
Cisco is tackling memory constraints with three moves: price increases as needed, updated contractual terms to reflect component volatility, and scale-driven procurement to secure supply. "Overall, we feel confident in our ability to manage this industry wide dynamic better than our peers," said CEO Chuck Robbins.
Pricing resilience is showing up elsewhere too. Extreme Networks' CEO Ed Meyercord said a 7% price hike was "a total non-issue," pointing to the price inelasticity of networking. Buyers know they need modern networks; uptime beats small line-item savings.
How to sell through a component crunch
- Control the price conversation: anchor on risk and TCO. A small uplift vs. the cost of outages, delays, and missed AI goals.
- Tune contracts: add price-adjustment and lead-time clauses, define allocation priorities, and set shipment partials.
- Quote alternates: validate memory-dependent SKUs early and provide fallback configs with staged deliveries.
- Prioritize accounts with onshoring and edge AI plans - they justify premium for faster delivery.
- Pull forward EoS refreshes to lock in pricing and allocation before backlogs extend.
Competitive pressure is real - stay sharp on value and velocity
Analysts flagged stronger AI and refresh activity, but also warned that tough competition could cap growth momentum. Expect discount pressure and "good enough" challenger pitches.
- Win fast with proof: site surveys, design workshops, and pilot installs that compress time to decision.
- Quantify outcomes: power savings, reliability gains, edge inference throughput, and team hours reclaimed.
- Protect margin: bundle software, optics, and services; swap broad discounts for time-boxed promos and add-on credits.
Quick talk tracks by buyer
- CIO/CTO: "Your AI and onshoring plans will stall without a modern network. Let's lock the refresh while allocation is available."
- Ops: "Fewer failures, faster changes, and observability tied to action - less firefighting, more uptime."
- Finance: "Smoother cash flow with cloud subscriptions and predictable support; minor price moves avoid bigger outage costs."
- Procurement: "Multi-vendor optics choice stays intact; we'll write terms that protect pricing and lead times."
Next steps for sales teams
- Build a named list of Catalyst fleets hitting end-of-support; align to AI and edge projects.
- Pair networking refresh proposals with Splunk cloud migration and clear adoption milestones.
- Include CPO-ready language without timelines; offer trade-up options.
- Add price-adjustment and supply-assurance clauses to every quote.
- Forecast conservatively on memory-heavy SKUs and secure allocation early.
For official company updates and investor materials, visit Cisco Investor Relations.
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