Cisco stock plunges 10% after cautious guidance and slow AI ramp-up
Cisco shares dropped more than 10% after the company issued cautious near-term guidance despite beating quarterly earnings and revenue estimates. For the quarter, Cisco reported $1.04 adjusted EPS vs $1.02 expected and revenue of $15.35bn vs $15.12bn expected; net income rose to $3.18bn. However, guidance for the current quarter of $1.02–$1.04 EPS and $15.4–$15.6bn revenue merely matched or slightly exceeded analyst expectations, disappointing investors seeking stronger AI-driven growth. Cisco disclosed $2.1bn in AI infrastructure orders from large cloud customers but signalled that meaningful benefits from sovereign and large-cloud AI deals are not expected in fiscal 2026; material upside is forecast for 2027. CEO Chuck Robbins highlighted supply-cost pressure from rising memory prices tied to high demand for Nvidia chips and said smaller “neocloud” customers may contribute in H2, with larger gains later. Full-year targets: $4.13–$4.17 adjusted EPS and $61.2–$61.7bn revenue (~8.5% growth), modestly above Street expectations. Traders reacted negatively to the lack of an immediate AI growth catalyst and conservative near-term outlook, prompting the sell-off.
Neutral
The market reaction is primarily to Cisco’s cautious near-term guidance and timeline for AI revenue rather than weak underlying fundamentals. Cisco beat current-quarter estimates and set a modest full-year outlook slightly above Street estimates, but emphasized that major AI-related upside (sovereign deals, large-cloud acceleration) is unlikely in fiscal 2026 and more probable in 2027. For crypto markets, the news is neutral: Cisco is a legacy networking vendor, not a direct crypto infrastructure provider, so there is no immediate chain-level impact. However, investor appetite for AI winners affects broader tech sentiment and risk appetite. Historically, cautious guidance from large tech firms (e.g., prior soft guidance from Facebook/Meta or IBM) has sometimes sparked short-term risk-off moves across equities and correlated crypto sell-offs, but effects faded if upcoming quarters showed tangible AI traction. In the short term expect heightened volatility in tech and risk assets as traders reprice AI-exposure stories; larger-cap crypto assets (BTC, ETH) could see correlated weakness if equities rout intensifies. Long term, if Cisco delivers on AI infrastructure orders and supply-chain adjustments, sentiment could recover; absent near-term evidence of material AI revenue acceleration, the event is unlikely to change crypto market structure or fundamentals.