Cisco outperformed always modest expectations, with the networking giant posting record revenue for the third quarter of its fiscal 2026, numbers bolstered by continued strength in its core networking and AI business that outflanked ongoing security business challenges, though that overall strength was not enough for thousands of Cisco workers handed pink slips.

Cisco’s total revenues increased 12% year over year to $15.8 billion, growth led by the vendor’s networking division that posted a 25% year-over-year increase to $8.8 billion. Cisco CEO Chuck Robbins told investors during the earnings call that networking orders surged 50% during the quarter “driven by triple-digit growth in service provider routing and compute, and double-digit growth in data center switching, campus switching, wireless, enterprise routing, and industrial IoT products.”

The vendor’s Acacia optical business struck $1 billion in orders during the quarter, with expectations of a 200% full-year increase in revenues. Robbins noted that Acacia has shipped more than 750,000 400 Gb/s (400G) and more than 40,000 800G coherent pluggable optics to date.

Cisco’s AI work also continued to show robust growth, with hyperscale customers ringing up $1.9 billion in Q3 sales, which was more than triple what they purchased the previous year. Cisco has scored more than $5.3 billion in hyperscale-related AI sales through three quarters, with expectations of $9 billion in total orders for the full year and $4 billion in recognized revenue.

The most recent quarter included the first three design wins for Cisco’s Silicon One-based P200 platform that it unveiled late last calendar year.

What about security and Splunk? Eh …

While AI and networking continued to boom, Cisco’s security unit continued to blah. Overall segment sales were flat year over year at $2 billion, with growth from new initiatives like its firewall, secure access, extended detection and response (XDR), Hypershield, and AI Defense lines pulled down by sales drops for Cisco’s legacy offerings.

Cisco’s Splunk division remains more challenging with the continued acceleration in the shift from on-premises deployments to cloud subscriptions creating what Robbins said was “a near-term drag on revenue growth as we’ve previously outlined. We expect the mix of cloud business to continue to grow in Q4, while we are on track to exceed our target of 1,000 new customer logos for Splunk in [fiscal year 2026],” Robbins added of Cisco’s $28 billion division.

Despite the security doldrums, Cisco continues to invest in its cybersecurity services, including its recent purchases of Astrix and Galileo Technologies.

That security headwind was not enough for Cisco to tout more growth as the vendor increased Q4 and full-year 2026 guidance (wonder if they will beat it?), which management tied to growing AI-related purchases from hyperscalers and continued network refresh opportunities. That was enough for Cisco’s stock to hit a new all-time high of more than $119 per share – for those who like to link that number to something.