Cisco Raises Prices Amid Memory Costs, Sees No Impact on Sales
- Cisco is absorbing increased memory costs and passing those expenses onto customers through price increases, but the networking giant reports minimal disruption to demand.
- CEO Chuck Robbins explained that Cisco has already implemented price adjustments and will “continue to monitor market trends and make additional adjustments as necessary.” Beyond direct price hikes,...
- The impact of these price increases is mitigated, according to Robbins, by the relatively lower memory requirements of networking appliances compared to servers.
Cisco is absorbing increased memory costs and passing those expenses onto customers through price increases, but the networking giant reports minimal disruption to demand. The company detailed its strategy during its Q2 2026 earnings call, emphasizing its ability to navigate the challenging component market.
CEO Chuck Robbins explained that Cisco has already implemented price adjustments and will “continue to monitor market trends and make additional adjustments as necessary.” Beyond direct price hikes, the company is also “revising contractual terms with channel partners and customers to address evolving component prices.” Cisco is leveraging its scale to secure supply and maintain fulfillment of both current and future orders, Robbins added.
The impact of these price increases is mitigated, according to Robbins, by the relatively lower memory requirements of networking appliances compared to servers. “So the price increases are more nominal,” he stated, expressing confidence that buyers recognize the situation is beyond Cisco’s control.
CFO Mark Patterson reinforced this sentiment, stating that customers haven’t indicated any plans to delay or defer strategic investments due to the rising cost of memory. Notably, Patterson also said customers didn’t attempt to accelerate purchases to avoid the anticipated price increases. “I think, frankly, also a lot of them understand that we’ll probably be able to manage this a lot better than some of our peers, too,” he said.
Despite the inflationary pressures, Cisco reported a record revenue of $15.3 billion for the quarter, a ten percent year-over-year increase. This performance is being fueled, in part, by growing demand related to artificial intelligence infrastructure.
Robbins outlined two key avenues for capitalizing on the AI wave. The first involves upgrades to existing networks, recognizing that “legacy infrastructure was not designed for the performance, speed and security needs of AI.” The second focuses on serving hyperscalers, though Robbins acknowledged the “lumpy” nature of demand from these large customers.
Cisco reported $2.1 billion in orders from hyperscalers during the quarter, representing a significant acceleration from $800 million in the previous financial year. However, financial analysts on the earnings call pointed out that these figures remain relatively small compared to the $635 billion Amazon, Google, Meta, and Microsoft collectively plan to spend on infrastructure this year, according to recent estimates.
Robbins highlighted the appeal of Cisco’s optics portfolio and its programmable Silicon One processors to hyperscalers, citing opportunities in sovereign and neocloud environments. The company is also benefiting from a broader trend: a major multi-year, multi-billion-dollar refresh cycle for campus networks.
Beyond AI, Cisco is experiencing double-digit growth in datacenter switching sales for six of the last eight quarters. Looking ahead, the company forecasts Q3 revenue between $15.4 billion and $15.6 billion, and a full-year revenue of $61.2 billion to $61.7 billion. Achieving these targets would establish new company records.
Despite the positive financial results and optimistic outlook, Cisco’s stock experienced a downturn following the earnings call. Shares fell nearly one percent during Wednesday’s trading session and then tumbled 7.5 percent in after-hours trading, suggesting investor caution despite the company’s strong performance. This reaction may reflect concerns about the sustainability of current growth rates or the potential impact of ongoing component cost pressures. According to a report from , CNBC noted that Cisco shares spiked higher after the initial Q2 results, but the subsequent dip indicates a more complex market sentiment.
The company’s ability to navigate the current economic climate and maintain its position as a key player in the networking infrastructure market will be closely watched in the coming quarters. The increased purchase commitments, up 73% over the past 90 days, are heavily influenced by memory costs, according to reports from .