- Cisco shares slid 6% on Friday, a day after the networking company reported fiscal first-quarter results that beat estimates and raised guidance, CNBC reported. Even with that drop, the stock was heading for a 2% gain on the week and was on pace to snap a four-week slide.
- For the quarter, Cisco posted adjusted earnings of $1.40 a share, versus $1.33 expected, a 5% beat, by our calculation, and revenue of $18.5 billion, versus $18.1 billion expected, according to LSEG estimates cited by CNBC. Revenue increased 24% from $14.88 billion a year earlier, and net income rose to $4.6 billion, or $1.14 a share, from $2.9 billion, or 72 cents a share, a year ago.
- The company raised its expectation for AI-infrastructure revenue from hyperscalers to $9 billion this fiscal year, more than double the figure in fiscal 2026, CNBC said. CEO Chuck Robbins said organizations are turning to Cisco “to help them scale, secure and optimize their environments for the agentic AI era.” For the fiscal second quarter, Cisco forecast revenue of $18 billion to $18.2 billion, above the $17.88 billion average estimate, and adjusted earnings of $1.34 to $1.36 a share, above the $1.23 average.
- Cisco also lifted its outlook for the full year ending July 2027, calling for adjusted earnings of $5.47 to $5.53 a share, topping the FactSet consensus of $5.10, CNBC’s movers blog said. The midpoint of that range is about 8% above the FactSet consensus, by our calculation. As of Thursday’s close, the stock was up about 35% this year, trouncing the Nasdaq’s gain of about 9%.
What Happened?
Shares had risen in extended trading on Thursday after the report, then reversed in Friday’s regular session, a classic “sell the news” move after a strong print and a guidance raise. Cisco has been trying to gain a foothold in the AI build-out after missing the early years of the generative-AI boom, and the jump in hyperscaler AI-infrastructure revenue to a $9 billion target is the company’s bid to show it is catching up. That message landed into a session in which investors were dumping other AI-infrastructure names, which helps explain why a beat and a raise were not enough to hold the after-hours gain.
Why It Matters?
The contrast with the rest of the AI tape is useful. Nvidia, CoreWeave, Dell and other build-out names were under pressure, while Cisco — a vendor selling networking gear into the same build-out, but with a more diversified franchise and a 35% year-to-date gain already in the price — was used as a place to take profits. The still-positive weekly performance, and the snap of a four-week slide, suggest the selling was about positioning rather than a rejection of the $9 billion AI outlook. Wall Street, CNBC noted, remained “somewhat measured” even after the beat.
What’s Next?
Investors will watch whether Friday’s 6% drop attracts buyers next week and whether management’s AI-infrastructure target holds up as hyperscalers and neoclouds digest Nvidia’s leadership change. The fiscal second-quarter revenue and earnings guide, which also came in above Street estimates, is the near-term fundamental yardstick. Any comment from Cisco on order timing or on customer financing conditions would be read through the same AI-credit lens that is hanging over the rest of the sector.
