Zhi Tong Cai Jing·2025-11-10 04:13Core Viewpoint - Cisco (CSCO.US) is set to announce its Q1 FY2026 earnings on November 12, with Wall Street expecting a revenue increase of 6.8% year-over-year to $14.78 billion and an EPS growth of 7.7% to $0.87 [1][2] Group 1: Financial Expectations - Revenue from the networking segment is anticipated to grow by 8.7% to $7.34 billion, while the services segment is expected to see a 2% increase to $3.8 billion [1] - Cisco's stock has risen nearly 40% over the past 12 months, attributed to better-than-expected sales, stable gross margins, and the market excitement surrounding artificial intelligence (AI) [1] Group 2: Market Sentiment and Valuation - Investors are focused on whether Cisco can maintain its growth momentum, despite the attractive AI narrative, as the company is not a high-growth tech firm and its stock performance is significantly influenced by overall market cycles [1] - Cisco's current price-to-earnings ratio is close to 30, which is considered high and aligns with the cyclical adjustments in the S&P 500 index [1] Group 3: Capital Expenditure Trends - The upcoming earnings report will indicate whether Cisco can capitalize on the significant increase in capital expenditures from large-scale customers over the past year, with plans to further expand budgets in 2026 [2] - For the Q1 FY2026 earnings, Cisco needs to either exceed expectations in the networking business or show a notable recovery in its remaining performance obligations (RPO) for the stock price to react positively [2]