Non‑GAAP gross margin was 66.0% in the quarter, down 260 bps year‑over‑year, and product gross margin was 64.3%, down 330 bps. The AI wave that grew the order book is pressuring margin; our CFO says the bigger factor is mix – hardware up roughly 30% while software flat – and we’re also seeing unprecedented memory pricing as DDR4 shifts to DDR5. We’re mitigating through about 20 programs, price increases, tighter terms, advance purchase commitments and productivity improvements as a partial offset.

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CSCO / The counterweight - AI demand fills the book and squeezes the margin

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2026-07-30T08:01:07.012Z