Cisco Stock Plunges 20% Amid Profit-Taking and Fair Value Gap Filling

Cisco Systems stock has taken a hit, dropping to its lowest level since May 13 as investors took profits and filled the fair value gap. The stock is currently trading at $105, down by 20% from its highest point this year, which eroded billions of dollars in market capitalization.

The company's recent earnings report showed revenue jumped by 18% to $17.3 billion in the last quarter, driven by strong demand for its solutions. This growth is expected to continue as the AI supercycle gains momentum, with JPMorgan's Jamie Dimon predicting that AI spending from hyperscalers will hit over $1 trillion next year.

Cisco Systems' management boosted its forward guidance, predicting revenue of between $18 billion and $18.2 billion this quarter. Analysts are bullish on the stock, with 16 out of 22 analysts having a buy rating and an average estimate of $119, which is 12% above the current price.

However, the short-term outlook for the stock is bearish, with the next key target being at $100. In the long term, however, the stock is expected to bounce back and retest its all-time high of $130.