Cisco Earnings Report: AI Growth Prospects in Focus

Cisco Systems is set to report its fiscal Q4 earnings after market close on August 12, and investors are eagerly awaiting the results. The consensus estimates are $16.82B in revenue, a 13% year-over-year increase, and EPS of $1.17.

However, the real question on everyone's mind is whether management will raise its AI order target above $9B and guide FY27 for low-teens growth, exceeding the Street's 9.5% estimate. Cisco has already seen a significant price increase this year, with a 57% YTD gain and a current stock price of $120.43.

The technical setup is bullish, with the weekly ADX at 59.9 indicating an extremely strong trend in place. But the risk is that Cisco's last two earnings reactions have been mixed, with a 16.4% increase after beating estimates in Q3 and a 13.1% drop despite beating estimates in Q2.

Investors are advised to approach this situation with caution, as the stock is already up significantly and expectations are elevated. Buying now is an earnings gamble, but waiting until after the close lets the market price in the reaction. The level to watch is if Cisco holds above $125 in after-hours trading, which would be a bullish signal.