Cisco has increased hardware prices to offset rising memory costs, but says customers are not pulling back on spending.
The company addressed the move during its Q2 2026 earnings call, where executives stressed that demand remains steady despite higher bills.
Cisco confirmed it has already implemented price increases and may introduce further adjustments depending on market conditions.
CEO Chuck Robbins said the company will “continue to monitor market trends and make additional adjustments as necessary.”
He added that Cisco is revising contractual terms with channel partners and customers to reflect evolving component prices, while leveraging its scale to negotiate favorable supply agreements.
Customers ‘understand’ situation
Robbins noted that networking appliances require less memory than servers, meaning price increases are relatively modest.
“Customers get it. And while they may not like it, they understand that it's a dynamic that we're all dealing with,” he said.
Chief Financial Officer Mark Patterson echoed that sentiment, saying customers are not delaying or deferring strategic investments because of higher memory costs.
“I haven't talked to any customers that are really willing to delay or defer any sort of strategic investments,” Patterson said.
He also noted that buyers did not rush to purchase equipment before memory prices surged, adding that many customers believe Cisco can manage cost pressures better than some of its peers.
Cisco reported $15.3 billion in revenue for the quarter, marking a company record and a 10 percent year-over-year increase.
The strong performance comes even as the broader tech industry grapples with supply chain constraints and component price volatility.
Surfing AI wave
Robbins said Cisco is benefiting from artificial intelligence trends in two key ways.
Upgrading Legacy Networks
The company is selling upgrades to existing infrastructure, as legacy networks were not built to handle the performance, speed and security demands of AI workloads.
Selling to Hyperscalers
Cisco is also supplying hyperscale cloud providers, though Robbins described them as “lumpy” buyers due to irregular purchasing patterns.
The company secured $2.1 billion in hyperscaler orders during the quarter — an $800 million increase from the previous quarter and higher than all hyperscaler orders recorded in the prior financial year.
However, financial analysts pointed out that the figure is small compared to the $635 billion Amazon, Google, Meta and Microsoft plan to spend on infrastructure this year.
Robbins said hyperscalers are drawn to Cisco’s optics portfolio and its programmable Silicon One processors. He also identified sovereign clouds and neoclouds as emerging opportunities.
Beyond AI
Cisco sees additional growth outside the AI boom.
Robbins said customers are at the start of a major multi-year, multi-billion-dollar campus networking refresh cycle.
He also highlighted double-digit datacenter switching sales growth in six of the last eight quarters.
Cisco forecast Q3 revenue between $15.4 billion and $15.6 billion, with full-year revenue projected at $61.2 billion to $61.7 billion.
If achieved, both would represent record highs for the company.
Despite the optimistic outlook, investors appeared cautious. Cisco shares slipped nearly one percent on Wednesday and fell 7.5 percent in after-hours trading.
