By Faizan Farooque
Publication Date: 2026-08-13 18:52:00
This article first appeared on GuruFocus.
Cisco Systems Inc. (CSCO, Financials), the networking equipment maker, fell about 7% in premarket trading even after its latest results and outlook came in ahead of Wall Street expectations. The disconnect appears to be margins.
Morgan Stanley said Cisco is seeing broad strength across enterprise and hyperscaler AI demand, but a heavier hardware mix could pressure gross margins by roughly 200 basis points in fiscal 2027.
At the same time, the firm expects Cisco’s hyperscaler AI revenue to reach about $7.5 billion next year, nearly doubling from current levels.
Wells Fargo also highlighted momentum in networking, enterprise AI adoption and Cisco’s campus upgrade cycle, while raising its price target to $150 from $130. Morgan Stanley lifted its target to $135 from $130.
Cisco’s fiscal 2027 revenue guidance of $72.2 billion to $73.4 billion also topped expectations, while networking…
