Core Viewpoint - Cisco Systems and Qunnect have successfully built and operated a quantum network using fiber optic cables in New York, demonstrating practical applications for quantum computing in real-world settings [1]. Group 1: Quantum Network Development - The quantum network connects Brooklyn and Manhattan, utilizing Qunnect's hardware and Cisco's software to address challenges in existing data centers [1]. - The network operates effectively over a distance of 17.6 kilometers (10.9 miles) of fiber optic cable, maintaining integrity through automatic polarization controllers [1]. Group 2: Technological Innovations - Qunnect's approach minimizes the need for cryogenic cooling, requiring it only at one central hub, while other connected data centers can operate with room-temperature equipment [1]. - The technology corrects for real-world issues that typically affect quantum networks, such as vibrations and complex fiber arrangements [1]. Group 3: Future Applications - Cisco envisions this foundational experiment as a step towards connecting quantum computers within data centers and eventually creating a quantum internet [1]. - Practical applications of quantum networks could include high-speed trading, where quantum entanglement allows for instantaneous information sharing between distant computers [1].

Revenue Performance - Total revenue for the second quarter of fiscal 2026 increased by 10% to $15.349 billion compared to $13.991 billion in the same period of fiscal 2025[167]. - Product revenue rose by 14%, while services revenue decreased by 1% in the second quarter of fiscal 2026[170]. - Total revenue for the first six months of fiscal 2026 increased by 9%, with product revenue up by 12%[177]. - Total revenue for the three months ended January 24, 2026, increased by 10% to $15,349 million compared to $13,991 million for the same period in 2025[203]. - For the six months ended January 24, 2026, total revenue increased by 9% to $30,232 million compared to $27,832 million for the same period in 2025[207]. Income and Earnings - Net income for the second quarter was $3.175 billion, a 31% increase from $2.428 billion in the prior year[167]. - Diluted earnings per share increased by 31% to $0.80, driven by revenue growth and operating margin improvement[167]. - Total operating income for Q2 fiscal 2026 was $3,781 million, a 21% increase from $3,113 million in Q2 fiscal 2025, with operating income as a percentage of revenue rising to 24.6%[255]. Segment Performance - Revenue from the Americas and EMEA both increased by $0.6 billion, while APJC revenue increased by $0.1 billion[172]. - Revenue from the Americas segment for the three months ended January 24, 2026, was $8,845 million, an increase of 8% from $8,202 million in the same period in 2025[204]. - EMEA segment revenue increased by 15% to $4,425 million for the three months ended January 24, 2026, compared to $3,855 million in the same period in 2025[204]. - APJC segment revenue increased by 8% to $2,080 million for the three months ended January 24, 2026, compared to $1,934 million in the same period in 2025[204]. Product Revenue - Networking product revenue grew by 21%, particularly in AI Infrastructure and Campus Networking solutions[173]. - Total product revenue for the company reached $11,642 million for the three months ended January 24, 2026, a 14% increase from $10,234 million in the same period of 2025[218]. - Product revenue for the same period increased by 14% to $11,642 million, while services revenue decreased by 1% to $3,707 million[203]. - Product revenue for the six months increased by 12% to $22,719 million, while services revenue remained flat at $7,513 million[207]. Margins - Gross margin for products was 63.9% for the three months ended January 24, 2026, slightly up from 63.7% in the same period of 2025[232]. - Total gross margin for the company was 65.0% for the three months ended January 24, 2026, compared to 65.1% for the same period in 2025[232]. - Product gross margin for Q2 fiscal 2026 increased to 63.9%, up from 63.7% in Q2 fiscal 2025, driven by productivity improvements[234]. - For the first six months of fiscal 2026, product gross margin decreased by 0.2 percentage points to 64.2%, primarily due to negative impacts from product mix and pricing[236]. - Services gross margin decreased by 0.5 percentage points in Q2 fiscal 2026 and by 0.1 percentage points in the first six months, mainly due to higher headcount costs[238]. Expenses - R&D expenses for Q2 fiscal 2026 increased to $2,355 million, reflecting a 2% increase from $2,299 million in Q2 fiscal 2025, driven by higher headcount-related expenses[245]. - Sales and marketing expenses rose to $2,881 million in Q2 fiscal 2026, an 8% increase from $2,672 million in Q2 fiscal 2025, primarily due to higher headcount-related expenses[249]. Cash and Investments - Cash and cash equivalents and investments totaled $15.777 billion as of January 24, 2026, down from $16.110 billion on July 26, 2025[179]. - Cash and cash equivalents decreased by $888 million (10.6%) to $7.458 billion as of January 24, 2026, compared to $8.346 billion as of July 26, 2025[266]. - Free cash flow for the first six months of fiscal 2026 was $4.428 billion, down from $5.475 billion in the same period of fiscal 2025, reflecting a decrease of $1.047 billion (19.1%)[269]. Inventory and Commitments - Total inventories increased by $756 million (23.9%) to $3.920 billion as of January 24, 2026, compared to $3.164 billion as of July 26, 2025[276]. - Inventory purchase commitments increased by $2.456 billion (32.3%) to $10.055 billion as of January 24, 2026, compared to $7.599 billion as of July 26, 2025[276]. - Total provisions for inventory and liabilities related to purchase commitments were $104 million and $357 million for the first six months of fiscal 2026 and 2025, respectively[190]. Tax and Interest - The effective tax rate for the second quarter of fiscal 2026 was 12.9%, down from 15.9% in the second quarter of fiscal 2025[199]. - Interest income decreased by $28 million (11.8%) to $210 million for the three months ended January 24, 2026, compared to $238 million for the same period in 2025[258]. - Interest expense decreased by $34 million (8.4%) to $370 million for the three months ended January 24, 2026, compared to $404 million for the same period in 2025[258]. Foreign Currency and Hedging - Approximately 75% of the company's operating expenses are denominated in U.S. dollars[305]. - The company may hedge certain forecasted foreign currency transactions to reduce variability in operating expenses caused by non-U.S.-dollar denominated costs[305]. - The gains and losses on foreign exchange contracts help mitigate the effect of currency movements on operating expenses and service cost of sales[305]. - The company enters into foreign exchange forward and option contracts to reduce short-term effects of foreign currency fluctuations on receivables and payables[306].

Core Viewpoint - Cisco (CSCO) experienced a 9.4% decline in stock price over the past week despite beating earnings expectations, attributed to market fears regarding AI disruption. Analysts maintain a target price of $88.81, indicating a potential upside of 16% from current levels [1]. Financial Performance - Cisco reported earnings of $1.04 per share, exceeding the consensus estimate of $1.02, with revenue of $15.35 billion, reflecting an 8.5% year-over-year increase, although it slightly missed the target of $15.42 billion [1]. - Operating cash flow fell 19% year-over-year to $1.82 billion, raising concerns about financial health [1][2]. Market Sentiment - The stock's decline is linked to a shift in investor valuation of networking and software companies, with fears of a "SaaSpocalypse" where AI could disrupt traditional business models [1]. - Seven senior executives, including the CEO, sold $3.05 million in stock on earnings day, which negatively impacted market perception [1]. Analyst Outlook - Despite the recent selloff, 17 out of 26 analysts maintain a Buy or Strong Buy rating for Cisco, with no Sell ratings. The average target price of $88.81 suggests significant upside potential [1]. - KeyBanc has a Buy rating with a target of $87, while a bullish analyst projects a target of $182 based on AI infrastructure refresh cycles [1]. Growth Catalysts - Cisco secured $2.1 billion in AI infrastructure orders, indicating strong demand from hyperscalers [1]. - A campus networking refresh cycle is underway, with product orders increasing by 18% year-over-year, and the next-generation firewall market is projected to grow at a 12% annual rate through 2031 [1]. Valuation Metrics - Cisco's forward P/E ratio is 18x, significantly lower than its trailing P/E of 28x, suggesting expectations of earnings growth. The PEG ratio stands at 1.3, indicating reasonable valuation relative to its 31% year-over-year earnings growth [1]. - The company offers a 2.2% dividend yield and is engaged in aggressive buybacks, appealing to value-oriented investors [1].

Industry Overview - The Zacks Computer - Networking industry is facing heightened uncertainty due to global macroeconomic conditions and volatile supply-chain dynamics, particularly influenced by ongoing tariff issues [1][5] - The industry is characterized by fierce competition, which is impacting pricing power and margin expansion [1][6] - Long-term growth is expected to be driven by advancements in cloud computing, network security, big data, cloud storage, and next-generation connectivity, particularly with the rapid adoption of AI technology [1] Trends Influencing the Industry - The proliferation of AI workloads and hyperscale data centers is driving investments in high-speed interconnects, optical networking, and Ethernet switches, creating a multi-billion-dollar AI infrastructure opportunity [2] - The rapid deployment of 5G technology is enhancing the Internet of Things (IoT), Advanced Driver Assistance Systems, AR/VR devices, and 5G smartphones, increasing demand for robust networking infrastructure [2][8] - The Wi-Fi 7 upgrade cycle is expected to act as a catalyst for growth, addressing the demand for high-speed connectivity and supporting a higher number of connected devices [9][10] Company Performance - Cisco Systems reported a 10% year-over-year revenue increase in Q2 fiscal 2026, driven by demand for AI infrastructure and campus networking solutions, with product revenues up 14% [19][20] - Extreme Networks achieved a 14% year-over-year revenue growth in Q2 fiscal 2026, supported by strong demand for its AI-driven cloud networking solutions and the launch of Platform ONE [27][28] - RADCOM is targeting a revenue growth of 8-12% for 2026, with a focus on expanding its Tier 1 customer base and investing in R&D for 5G assurance [33][34] Market Performance - The Zacks Computer - Networking industry has outperformed the S&P 500, gaining 18.1% over the past year compared to the S&P 500's 14.1% increase [13] - The industry's current forward 12-month price-to-earnings (P/E) ratio is 21.85X, slightly lower than the S&P 500's 22.52X and down from the sector's 25.17X [16]

Robert Brokamp: Being intentional with your cash flow and the best performing sector of the past five years may surprise you. You're listening to the Saturday Personal Finance edition of Motley Fool Money. I'm Robert Bro Camp, though my nickname here at The Fool is Bro. Don't be surprised if you hear colleagues call me Bro when they're guests on the show, including this week when fellow Fool employee and certified financial planner, Stephanie Marini joins me to discuss this month's installment of our 2026 F ...

The AI trade has been driving the markets for the better part of the last two years. At this point, there are lots of questions swirling though. The first part of that would be whether the capex spending is too much and whether the revenues will ever show up for the hyperscalers. The second part is will AI actually disrupt or destroy lots of businesses and jobs that are out there.Joining us right now is someone who has lived through technology revolutions in the past. John Chambers is the former CEO of Cisc ...

The AI trade has been driving the markets for the better part of the last two years. At this point, there are lots of questions swirling though. The first part of that would be whether the capex spending is too much and whether the revenues will ever show up for the hyperscalers. The second part is will AI actually disrupt or destroy lots of businesses and jobs that are out there.Joining us right now is someone who has lived through technology revolutions in the past. John Chambers is the former CEO of Cisc ...

Economic Overview - The U.S. economy added 130,000 nonfarm payrolls in January, significantly exceeding expectations of 70,000, with private employers contributing 172,000 jobs, marking the strongest gain since December 2024 [2] - The unemployment rate decreased to 4.3% from 4.4%, indicating a positive trend despite a downward revision of 898,000 jobs in prior payroll estimates [3] - Consumer prices rose 2.4% year over year in January, down from 2.7% and below forecasts of 2.5%, representing the lowest inflation reading in eight months [4] Inflation and Interest Rates - Core inflation eased to 2.5%, the lowest since March 2021, suggesting potential for additional interest-rate cuts, with markets pricing in at least two reductions by year-end [4] Technology Sector Challenges - The tech industry is facing higher costs for memory and storage products due to a global supply crunch, raising concerns about profit compression in AI infrastructure spending [6] - In a single session, 10 tech giants lost over $500 billion in market capitalization, reflecting the impact of these cost pressures [6] Automotive Industry Insights - Ford reported a strong performance in 2025 despite facing approximately $2 billion in losses related to supplier issues and a $2 billion net tariff headwind [7] - The company incurred $15.5 billion in special charges primarily linked to scaling back electric vehicle plans announced in December [8] - Following the earnings report, Ford's shares rallied for three consecutive sessions, reaching January highs, and the CEO approved higher bonuses for 75,000 salaried employees due to improved vehicle quality [8]

Where Will Cisco (CSCO) Stock Be in 5 Years? - 24/7 Wall St.[S&P 5006,854.40 +0.10%][Dow Jones49,563.00 +0.14%][Nasdaq 10024,756.20 -0.01%][Russell 20002,658.83 +1.65%][FTSE 10010,450.20 +0.14%][Nikkei 22557,428.00 +0.72%][Stock Market Live February 13, 2026: S&P 500 (SPY) Fighting to Go Green][Investing]# Where Will Cisco (CSCO) Stock Be in 5 Years?### Quick ReadAfter some share-price ups and downs, Cisco Systems (CSCO) now trades at a fairly reasonable 21.44 times historic earnings.Cisco reported a respec ...

Market Overview - U.S. stock futures showed mixed results as investors awaited key inflation data, which could influence the Federal Reserve's monetary policy [1][3] - The Dow Jones Industrial Average futures indicated a slight decline of about 0.16%, while S&P 500 futures were nearly flat, and Nasdaq 100 futures gained approximately 0.18% [2] Inflation Data Expectations - The January Consumer Price Index (CPI) report is anticipated to show a year-over-year inflation rate of 2.5%, a slight decrease from the previous month [3] - The core CPI, excluding food and energy prices, is also expected to increase by 2.5% year-over-year [3] - A softer inflation reading could support the case for potential interest rate cuts by the Federal Reserve later in the year [3] Recent Market Performance - All three major indexes closed lower, with the S&P 500 down by 1.6%, Nasdaq Composite down by 2%, and Dow Jones Industrial Average down by 1.3% due to concerns over artificial intelligence's impact on various industries [4] Earnings Reports and Market Movers - Applied Materials (AMAT) surged over 11% after reporting strong quarterly earnings and an optimistic forecast driven by demand for semiconductor manufacturing equipment [6] - Arista Networks (ANET) shares jumped more than 12% following a positive earnings report [6] - US Foods Holding (USFD) climbed 13.4% after releasing its fourth-quarter earnings and optimistic guidance for 2026 [7] - Equinix (EQIX) gained over 10% after analysts raised price targets following its earnings release and dividend increase [7] - On the downside, AppLovin (APP) fell nearly 20% due to mixed analyst reactions, while Cisco Systems (CSCO) dropped 12.3% despite better-than-expected results, and Pinterest (PINS) declined 14% after issuing a weak forecast [8] Global Market Sentiment - Asian markets traded lower, reflecting previous losses on Wall Street, while European indexes opened with mixed performance amid their own earnings reports [9] - Investors are also considering a new trade agreement between the United States and Taiwan aimed at reducing tariffs and boosting investment [9] Treasury and Oil Market - The 10-year Treasury yield remained stable at around 4.13% ahead of the inflation report [10] - WTI crude oil futures were trading higher, near $62.96 per barrel [10]