Cisco's Earnings Beat Not Enough to Move the Needle

Cisco Systems reported its quarterly earnings, which beat expectations but sent shares down by 7.4% in response to weak service revenue and lower-than-expected remaining performance obligations (RPOs) for AI-related sales.

The tech giant's hardware sales were strong, with Cisco producing $9.3 billion in AI orders this year, up from the initial guidance of $5 billion. However, the company did not provide new guidance on future revenue growth or AI order numbers.

Matt Frankel noted that Cisco has beaten earnings expectations for five consecutive quarters, and its current valuation at 40 times earnings is near an all-time high. Despite this, the stock remains within a few percentage points of its record price due to its consistent beating of earnings estimates.