By Trey Thoelcke
Publication Date: 2026-05-20 11:30:00
Cisco Systems (NASDAQ: CSCO | CSCO Price Prediction) and CrowdStrike (NASDAQ: CRWD) delivered very different earnings stories. Cisco posted $15.84 billion in Q3 FY26 revenue, while CrowdStrike closed FY26 with $5.25 billion in ending annual recurring revenue (ARR). Both stocks have risen sharply, raising a harder question: which carries the weaker risk/reward from here?
The Cisco Bear Case: Cost Cuts Dressed Up as Growth
Cisco looks healthy on the surface. Networking revenue jumped 25% year over year, and operating income climbed 23.67%. Look closer, and the picture gets messier. Security was flat, Collaboration slipped 1%, and Services fell 1%. Only one engine is firing.
Gross margins are quietly bleeding. Q4 FY26 gross margin guidance is 65.5% to 66.5%, compressed from 68.4% a few quarters back, as AI hardware mix dilutes profitability. Operating cash flow fell 7.39% year over year while capital spending spiked 58.62%. Management announced restructuring charges up to $1…
