Cisco Stock Falls on Earnings Despite Mild Beat (CSCO)

Cisco's stock (NASDAQ: CSCO) is trading down in the pre-market, dropping 4.21% after coming off multi year highs, as earnings failed to get the bulls moving.

In Cisco's first-quarter fiscal year 2025 earnings report, revenues dipped by a modest 5.6%—slightly better than the market's anticipated 6.1% drop. Additionally, Cisco's first-quarter earnings per share (EPS) outstripped forecasts by $0.04, hitting $0.91.

Impressively, Cisco also hiked the full-year 2025 revenue guidance by around $200 million courtesy of stronger performances in the first and second quarters. The catalyst for this growth includes robust demand in cloud technology, artificial intelligence (AI), and cybersecurity orders—a trend that echoed JPMorgan's upgrade of Cisco stock from “Neutral” to “Overweight” on expectations of increased earnings from heightened Enterprise Networking demand.

Despite reporting a 10% yearly decline in revenue for the fourth quarter of 2024, Cisco demonstrated significant progress in segments like Security and Observability. To cater to the rising demand for scalable, secure, and programmable networks, Cisco launched a new family of AI servers and AI PODs, incorporating NVIDIA’s accelerated computing power.

Moving forward, Cisco has committed an $80 million investment to revamp its partner program and has rolled out new AI solutions to enhance customer support quality. Additionally, analyst firms Citi and HSBC elevated Cisco's stock from “Neutral” to “Buy,” and Evercore ISI sustained its “Outperform” rating, mirroring the positive sentiment.

In other developments, Cisco announced a substantial investment in cloud services provider Coreweave, assigning it a $23 billion valuation. Reflecting investor confidence in its future growth in cloud, AI, and security sectors, Cisco's market capitalisation is at $236.17 billion with a price-to-earnings (P/E) ratio of 23.09.

Mirroring its commitment to shareholder returns, Cisco has consistently increased its dividend for 14 years straight, currently boasting a 2.7% dividend yield. Additionally, the consensus among 15 analysts has shifted, with earnings projections moving upward.