Cisco Stock Tumbles Amid Gross Margin Miss

Cisco Systems, Inc., (CSCO) shares plummeted over 12% on Thursday to their lowest level since May 2022 after the company reported second-quarter adjusted total gross margin of 67.5%, missing analysts' expectations of 68.7% from the same period last year.

However, despite the decline in gross margins due to higher memory costs, both UBS and Citi raised their price targets on Cisco shares. UBS increased its target to $95 from $90 and maintained a 'Buy' rating, citing the acceleration of Cisco's artificial intelligence order momentum during the quarter.

Citi also boosted its target to $90 from $85 and kept a 'Buy' rating, noting that the company's networking momentum in the quarter offset weaker gross margins. The analysts pointed out that multiple expansions of AI stocks contributed to the price increase.