Cisco Stock Falls on Margin Pressure Amid Strong Earnings

Cisco Systems(NASDAQ:CSCO), a leading networking hardware and security provider, closed at $113.47 on August 13, down 8.40%. The stock fell despite reporting better-than-expected fiscal fourth-quarter results and guidance.

The decline in Cisco's stock price was due to margin pressure, with total (non-GAAP) gross margin for the quarter dropping to 66.3% from last year's 68.4%. This decrease was partly attributed to the increased cost of components used in AI hardware, such as memory.

However, AI-related demand remains strong, and some analysts believe that operating margins will expand in fiscal 2027, resulting in profits growing faster than revenue.