Cisco shares rise ahead of Q4 earnings as 60% rally raises AI demand stakes
Cisco Systems shares advanced ahead of its fourth-quarter earnings report, where investors will scrutinize forward guidance to determine if AI-driven networking demand can justify the stock's 60% year-to-date rally.
Cisco Systems shares rose 2.2% to $123.07 on Wednesday as the networking equipment maker prepared to release fourth-quarter results after the market close. The stock is now trading near its record high of $130.37, having gained nearly 60% since the start of the year. That significant rally places heightened scrutiny on the company's ability to continue beating expectations.
Wall Street anticipates adjusted earnings of $1.17 per share on revenue of roughly $16.82 billion. A result at this level would set a new quarterly revenue record, surpassing the $15.84 billion posted in the fiscal third quarter. Cisco's own management forecast aligns closely, projecting revenue between $16.7 billion and $16.9 billion, non-GAAP earnings of $1.16 to $1.18 per share, and a gross margin of 65.5% to 66.5%.
The company's upward trajectory has been driven by heavy spending on artificial intelligence infrastructure and an accelerating refresh cycle for networking equipment. In the third quarter, Cisco reported record revenue of $15.8 billion, a 12% year-over-year increase that exceeded its own guidance. Total product orders surged 35% year over year, while orders excluding hyperscale customers still rose a robust 19%.
The most striking demand signal came from Cisco's networking segment, where product orders accelerated by more than 50% year over year. Following that strong quarter, Cisco raised its full-year revenue guidance to a range of $62.8 billion to $63 billion. The company also lifted its adjusted earnings outlook to $4.27 to $4.29 per share, up from a prior range of $4.13 to $4.17.
Despite these upward revisions, the market's reaction to the upcoming report will likely hinge on the future rather than the past. With the stock's valuation already reflecting much of this momentum, investors will parse management commentary for proof that the AI infrastructure opportunity has durable growth. Strong forward guidance could provide another catalyst, but any signal that order growth is decelerating would likely limit further upside.
