Cisco Stock Plunges Amid Margin Pressure Despite Record Revenue

Cisco Systems, a global networking hardware and security provider, closed at $113.47 on August 13th, down 8.40%. Despite delivering record revenue and strong AI demand, investors were focused on margin pressure.

Total (non-GAAP) gross margin for the quarter dropped to 66.3% from last year's 68.4%, partly due to increased costs of components used in AI hardware, such as memory. However, some analysts suggested that operating margins would expand in fiscal 2027, leading to profits growing faster than revenue.

The stock fell after better-than-expected fiscal fourth-quarter results and guidance. Trading volume reached 61.1 million shares, about 137% above its three-month average of 25.7 million shares.