Cisco shares fell 9% on Thursday, even after the company reported better-than-expected earnings and issued guidance that surpassed Wall Street estimates [1]. For the current quarter, Cisco projected revenue between $18 billion and $18.2 billion, exceeding the $16.8 billion average estimate from LSEG [1]. In the fiscal fourth quarter, revenue rose 18% to $17.3 billion, also beating analyst expectations of $16.8 billion [1]. Despite these strong results, some analysts described Cisco's guidance as 'conservative given the current demand environment,' with Piper Sandler noting that investors may be concerned about 'peak growth' and recommending holding the stock [1].
Cisco CEO Chuck Robbins emphasized the company's record performance, stating, 'We had a record year, we had a record quarter,' and explained that the conservative guidance was due to starting a new fiscal year and a desire to be prudent in the current market environment [1]. Cisco's shares had been up more than 60% for the year prior to the earnings release, driven by perceived benefits from the artificial intelligence boom [1]. However, while Cisco projects revenue growth of about 15% for this year, analysts expect sales growth to slow to single digits in the next fiscal year [1].
KeyBanc Capital Markets analysts remain bullish on Cisco, maintaining a buy rating and suggesting the company could gain market share as hyperscalers and neoclouds increase their capital expenditures [1]. Hyperscalers placed $4 billion in infrastructure orders during the quarter, totaling $9.3 billion for the fiscal year, and accounted for about $4 billion of revenue in the past fiscal year [1]. Cisco expects revenue from this group to nearly double to $7.5 billion in fiscal 2027 [1].
The stock was trading around $113 as of mid-day Thursday, below its record closing high of $130 in June [1].
CONCLUSION
Despite delivering record earnings and issuing strong guidance, Cisco's shares declined sharply as investors focused on conservative forward guidance and concerns about slowing growth. While some analysts remain optimistic about Cisco's market position and future revenue from hyperscalers, the immediate market reaction was negative, reflecting caution about the company's growth trajectory.