Cisco Logs 18% Q2 Order Surge and $2.1B AI Infrastructure Bookings
Cisco’s advanced purchase commitments rose by $1.8 billion over 90 days as Q2 product orders surged 18%, with 20% growth in hardware and 10% ex-hyperscale. The company booked $2.1 billion in new hyperscale AI infrastructure orders and tightened pricing terms to mitigate memory‐driven margin headwinds.
1. Order Growth and Commitments
Cisco’s Q2 product orders jumped 18%, driven by hyperscale AI and a campus networking refresh, with advanced purchase commitments rising $1.8 billion in 90 days. Excluding hyperscale, global orders still grew 10%, while hardware revenue increased over 20% in the quarter.
2. Pricing Strategy and Margin Management
Cisco tightened pricing policies by shortening lead times for price increases and limiting honored quotes to 30 days, introducing a price hike on compute and high‐memory products. These measures aim to offset gross margin pressure from unprecedented memory cost inflation and hardware‐heavy mix shifts.
3. AI Infrastructure and Hyperscale Momentum
Hyperscaler demand fueled $2.1 billion in new AI infrastructure orders over the last 90 days, matching the prior full year’s bookings. Cisco’s Silicon One chips, adopted by five of six major hyperscalers, underpin its strategy to capture rapid growth in data center networking.
4. Software, Security Transitions and Profitability
Software and subscriptions accounted for just over half of revenue, supported by $43 billion in RPO, while a Splunk‐related shift to ratable revenue weighed on reported security sales. Cisco delivered its highest operating margin in four quarters and expects organic security revenue growth approaching double digits by fiscal year-end.