Cisco Stock Slumps 20% Amid Profit-Taking After Record High

Cisco Systems stock has slumped to its lowest level since May 13, erasing billions of dollars in value as its market capitalization fell from $513 billion to $414 billion. The stock dropped to $105, down by 20% from its highest level this year.

The decline is attributed to profit-taking after the networking giant jumped to a record high. Despite releasing an earnings report on August 12 that showed revenue and profits surged, investors booked profits as Cisco's solutions continue to see strong demand.

Cisco's AI infrastructure orders jumped to $4 billion in the last quarter, bringing its annual increase to $9.3 billion. The management expects this growth to continue in the near term as the AI supercycle gains momentum, with JPMorgan's Jamie Dimon predicting that AI spending from hyperscalers will hit over $1 trillion next year.

The company is also seeing strong demand from neocloud, sovereign, and other enterprise customers. As a result, the management boosted its forward guidance, predicting revenue to soar to between $18 billion and $18.2 billion this quarter.