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AI Is Supplying Blowout Earnings Again

May 19, 2026 — 05:13 pm EDT

Written by

Motley Fool Staff for

The Motley Fool->

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Matt Frankel, and Jon Quast discuss:

- Cisco’s blowout earnings.

- What to do when a cyclical company has a new catalyst.

- Lumentem’s even more impressive earnings.

- Can a company with such a high valuation be worth it?

- Mailbag: What are some non-AI stock ideas for portfolio diversification?

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

A full transcript is below.

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This podcast was recorded on May 14, 2026.

Tyler Crowe: We're talking earnings and investor questions on Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime contributors, Matt Frankel and Jon Quast. Today, we're getting lots of questions from members, and we thought this would be a really good time to combine some listener questions as well as earnings reports that we've seen coming out in the past couple of days, as a little bit of a marriage of good ideas. We're going to talk about Cisco's earnings. We're going to talk about Lumentum's earnings, and also we'll get into, hey, maybe we should talk about non-AI things for a little bit from our investor mailbag.

But as I said, we're going to start with Cisco. We got a question a little while ago from one of our listeners. I hope I get the name right, Halish Shankar, and was asking about Cisco and what are our thoughts on it. I thought it would be a great time to start the conversation today because Cisco reported earnings, and the stock is up 13.8% as we were recording because numbers were pretty good. Revenue growth was up about 12% for the year earnings was up, and obviously guidance was looking pretty good. Jon, why don't you run us through the numbers and what you guys saw in this particular earnings that I would say defied expectations of what Cisco has been for a while.

Jon Quast: It's so surprising to be talking about Cisco, one of the poster children of the dot-com bubble over 20 years ago, but really, the business is booming unlike ever before. You look at the most recent quarter, 12% top-line growth. Really, all of the growth is coming from one part of the business. Cisco has various components, but there's one part of the business that's driving everything, and that is networking. The company reported 25% year-over-year growth in the networking side of the business. Everything else is either down or basically flat.

Essentially what is happening here? As the AI infrastructure build-out marches on, all of these GPUs, the clusters, even the data centers themselves need to be connected, and this really plays to Cisco's strengths. It's getting a ton of demand, in particular, from the hyperscaler businesses. You think of the public cloud giants, the tech giants, the Magnificent Seven, these are the companies that are needing network solutions, such as the ones that Cisco provides. What is fascinating here, when you look at the orders to the hyperscalers last fiscal year, about two billion total for Cisco. Going into this fiscal year, it was expecting five billion total, and that was quite ambitious of a projection, more than doubling year over year. But we're