Cisco's Q3 revenue rises 12% with AI orders doubling guidance, but stock valuation prompts downgrade to Hold.

Cisco Systems reported a 12% year-over-year revenue increase in Q3 2026, driven by a 35% surge in product orders fueled by AI demand. Hyperscale AI infrastructure orders exceeded expectations, leading management to nearly double the full-year revenue guidance to $9 billion. Despite strong fundamentals and shareholder returns, Cisco's stock now trades at a premium with a forward P/E of 27x, above its historical average. Due to this high valuation reflecting AI optimism, the stock is downgraded to Hold, suggesting limited near-term upside and advising caution or portfolio trimming.