Cisco Systems (CSCO) is set to report its quarterly earnings after the market closes on Wednesday, with Wall Street and investors closely watching whether the networking giant can extend its winning streak.
The company has exceeded earnings-per-share (EPS) and revenue estimates for four consecutive quarters, and expectations remain high as Cisco continues to ride the wave of AI-driven demand and shareholder-friendly initiatives.
Strong Earnings Expectations Amid AI Boom
For the upcoming quarter, Cisco is expected to post an EPS of $0.91 on revenue of $14.06 billion. These projections reflect steady growth, with analysts forecasting both top- and bottom-line improvements compared to the prior year.
The company’s robust performance has been underpinned by surging demand for AI security and networking solutions, as enterprises globally scale up their data infrastructure and adopt advanced cybersecurity measures.
CEO Chuck Robbins has repeatedly highlighted Cisco’s positioning as a key enabler for customers looking to expand network capacity and implement best-in-class AI security, reinforcing confidence in the company’s AI strategy.
Buybacks and Dividends Signal Confidence
Beyond operational growth, Cisco’s capital allocation strategy is also in the spotlight. The company recently increased its annual dividend and expanded its share buyback authorisation, with the board approving up to $15 billion in additional repurchases.
Such moves are widely interpreted as a sign of management’s confidence in Cisco’s long-term prospects and an effort to enhance shareholder value. The current annual dividend yield stands at approximately 2.74%, appealing to income-focused investors.
Analyst Sentiment and Market Reaction
Analyst sentiment ahead of the earnings call is broadly optimistic, with most price targets suggesting a potential upside of over 10% from current levels. The consensus price target is around $67, compared to the current share price of approximately $61.67.
While three out of ten analysts recommend a ‘buy’, the majority remain neutral, reflecting a balanced view amid ongoing macroeconomic uncertainties and recent tariff-related volatility.
Key Focus Areas for the Earnings Call
- Progress in AI infrastructure and security, especially order growth and customer adoption.
- Updates on the integration and performance of Splunk, which has boosted Cisco’s security revenue.
- Management’s outlook on macroeconomic headwinds, including tariffs and global demand trends.
- Any new developments in quantum computing, following Cisco’s recent announcements in the space.
Volatility and Trading Setup
Options markets are pricing in a modest move of less than 5% for Cisco shares around the earnings event, suggesting relatively low implied volatility. This indicates that, while investors expect solid results, any surprise-positive or negative-could still move the stock meaningfully.
If Cisco delivers another quarter of strong results and reinforces its AI-driven growth strategy, the stock could see renewed momentum, especially if management provides upbeat guidance for the remainder of 2025. Conversely, any disappointment in earnings or outlook could prompt a short-term pullback, particularly given the recent rally and broader market sensitivity.
