Core Viewpoint - A major global bank downgraded its recommendation on Cisco Systems, leading to a nearly 5% decline in the company's stock price, contrasting with a modest 0.3% drop in the S&P 500 index [1] Group 1: Recommendation Change - HSBC analyst Stephen Bersey lowered his recommendation on Cisco from buy to hold, setting a price target of $69 per share [2] - This downgrade occurred shortly after Cisco released its earnings for the fiscal fourth quarter of 2025, which did not meet expectations [4] Group 2: Earnings Performance - Cisco's revenue increased by 8% year over year, reaching almost $14.7 billion, while non-GAAP profitability rose by 12% to $4 billion, both slightly exceeding consensus analyst estimates [6] - Despite these increases, the company's performance was viewed as underwhelming given the high expectations for tech companies involved in AI [7] Group 3: Market Sentiment - The analyst expressed disappointment in Cisco's performance, suggesting that the effects of de-stocking in its key networking segment were already evident [5] - The current market environment for tech stocks is described as unforgiving, which has influenced investor sentiment towards Cisco following the earnings report [7]

Core Insights - Arista Networks is a primary beneficiary of the historic spending spree by tech giants on artificial intelligence (AI) infrastructure, with significant capital flowing to companies providing essential equipment [1][2] - The company has raised its full-year revenue growth forecast to 25%, reflecting its deep integration into the AI ecosystem and its role as a critical networking infrastructure provider [2][11] Financial Performance - Arista reported Q2 revenue of $2.205 billion, a 30.4% increase year-over-year, and non-GAAP earnings per share (EPS) of 73 cents, exceeding analyst expectations of 65 cents [11] - Management's confidence is evident as they raised the full-year 2025 revenue growth forecast from 17% to 25% [11] - The company expects AI-related networking revenue to exceed $1.5 billion in 2025, highlighting its tangible contribution to the AI sector [11] Technological Leadership - Arista is a leader in 400G and 800G Ethernet switches, essential for handling the large datasets required for AI model training and operation [4] - The company's low-latency hardware maximizes the return on expensive GPU investments, addressing the critical economic issue of network speed for AI operators [5] - The Arista Extensible Operating System (EOS®) provides a unified software platform, enhancing reliability and automation for large-scale data center operations [5][6] Market Position and Strategy - Arista's strategic position as a network provider for the AI era translates into significant growth and profitability, making it a fundamental investment in the AI revolution [8] - The company is expanding its enterprise networking market presence, particularly through the acquisition of VeloCloud, which enhances its ability to offer comprehensive solutions [9][10] - Analysts have raised their price targets for Arista's stock following strong financial performance, indicating growing confidence in the company's long-term trajectory [12]

Core Insights - Cisco Systems (CSCO) reported fourth-quarter fiscal 2025 non-GAAP earnings of 99 cents per share, exceeding the Zacks Consensus Estimate by 2.06% and reflecting a year-over-year increase of 13.8% [1] - Revenues reached $14.67 billion, surpassing the Zacks Consensus Estimate by 0.47% and showing a year-over-year growth of 7.6% [1] - Total Annual Recurring Revenues (ARR) were $31.1 billion, up 5%, with product ARR growth of 8% [1] Financial Performance - Fourth-quarter revenues from Networking were $7.63 billion, up 12% year over year; Security revenues were $1.95 billion, up 9%; Collaboration revenues were $1.04 billion, up 2%; and Observability revenues were $259 million, up 4% [4] - Total Product revenues in Q4 were $10.89 billion, accounting for 74.2% of total revenues, with a year-over-year increase of 10%; Service Revenues were $3.79 billion, flat year over year [5] - Operating expenses totaled $5 billion, up 3.6% year over year, but as a percentage of revenues, they declined by 130 basis points; non-GAAP operating income was $5.03 billion, up 13.3% year over year, with an operating margin of 34.3% [10] Regional Performance - Americas' revenues increased 9% year over year to $8.82 billion; EMEA revenues climbed 4% to $3.65 billion; APJC revenues rose 7% to $2.21 billion [6] AI Infrastructure and Partnerships - AI Infrastructure orders from webscale customers exceeded $800 million, contributing to total revenues of $2 billion in fiscal 2025, which is double the original expectation [6][9] - Cisco's partnership with NVIDIA is enhancing its offerings, particularly in AI infrastructure, with the integration of Cisco Nexus switches and NVIDIA's Spectrum-X architecture [7] Balance Sheet and Shareholder Returns - As of July 26, 2025, cash and cash equivalents and investments totaled $16.1 billion, up from $15.6 billion; total debt decreased to $28.1 billion from $29.2 billion [11] - Remaining performance obligations (RPO) were $43.5 billion, up 6%, with 50% expected to be recognized as revenues in the next 12 months; Cisco returned $2.9 billion to stockholders through share buybacks and dividends [12] Guidance - For Q1 fiscal 2026, Cisco expects non-GAAP earnings between 97 cents and 99 cents per share, with revenues projected between $14.65 billion and $14.85 billion [13] - For fiscal 2026, non-GAAP earnings are expected to be between $4 and $4.06 per share, with revenues anticipated between $59 billion and $60 billion [14]

Shares of Cisco Systems Inc CSCO came under some pressure in early trading on Thursday, after the company Wednesday reported upbeat fiscal fourth-quarter results. Here are some key analyst takeaways. Check out other analyst stock ratings. JPMorgan: Cisco Systems reported revenues of $14.7 billion. It topped the consensus of $14.6 billion, driven by stronger-than-expected Networking revenues. The company's gross and operating margins of 68.4% and 34.3% surpassed consensus estimates of 68.2% and 34.1%, respec ...

Market Overview - Broader equity markets have reached record highs, driven by a favorable inflation report that increased the likelihood of an interest rate cut by the Federal Reserve as early as next month [1] - The July consumer price index (CPI) rose 2.7% year on year, slightly below the expected 2.8%, while the core CPI increased by 3.1%, exceeding the expected 3% [1] - The probability of a rate cut is now at 94%, supported by strong second-quarter earnings [1] Investment Opportunities - A 90-day extension on higher tariffs against China has led to a positive market sentiment, with investors adopting a wait-and-see approach [2] - Companies with high return on equity (ROE) are highlighted as potential investment opportunities, as high ROE indicates effective reinvestment of cash [2][3] - Notable companies with high ROE include Arista Networks Inc. (ANET), TE Connectivity plc (TEL), Motorola Solutions, Inc. (MSI), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), and AppLovin Corporation (APP) [2] Company Profiles - **Arista Networks Inc. (ANET)**: Engaged in cloud networking solutions, with a long-term earnings growth expectation of 16.6% and a trailing four-quarter earnings surprise of 12.8% [7][8][9] - **TE Connectivity plc (TEL)**: A global technology company focusing on connectivity and sensor solutions, with a long-term earnings growth expectation of 9.8% and a trailing four-quarter earnings surprise of 4.9% [10][11] - **Motorola Solutions, Inc. (MSI)**: A leading communications equipment manufacturer with a long-term earnings growth expectation of 9.1% and a trailing four-quarter earnings surprise of 6.8% [12][13] - **Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)**: Provides retail and wholesale banking services, with a long-term earnings growth expectation of 6.9% and a trailing four-quarter earnings surprise of 7.4% [13][14] - **AppLovin Corporation (APP)**: Offers a software platform for advertisers, with a long-term earnings growth expectation of 20% and a trailing four-quarter earnings surprise of 22.4% [14][15] Screening Parameters - Stocks are screened based on criteria including cash flow greater than $1 billion, ROE greater than the industry average, price/cash flow lower than the industry average, and return on assets (ROA) greater than the industry average [5][6] - Additional criteria include a 5-year EPS historical growth greater than the industry average and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [7]

Core Insights - Cisco Systems (CSCO) reported $14.67 billion in revenue for the quarter ended July 2025, marking a year-over-year increase of 7.6% and an EPS of $0.99 compared to $0.87 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1] Revenue Breakdown - Revenue from Networking products was $7.63 billion, surpassing the average estimate of $7.19 billion, with a year-over-year change of +12.2% [4] - Revenue from Observability products was $259 million, below the estimated $288.55 million, reflecting a +4.4% change year-over-year [4] - Revenue from Services was $3.79 billion, slightly below the average estimate of $3.88 billion, with a year-over-year change of +0.1% [4] - Revenue from Security products was $1.95 billion, below the estimated $2.2 billion, showing a +9.2% change year-over-year [4] - Total Product revenue was $10.89 billion, exceeding the average estimate of $10.72 billion, with a year-over-year change of +10.4% [4] - Revenue from Collaboration products was $1.04 billion, matching the average estimate, with a +2.3% change year-over-year [4] Gross Margin Insights - Non-GAAP Gross Margin for Services was $2.68 billion, slightly below the average estimate of $2.75 billion [4] - Non-GAAP Gross Margin for Products was $7.35 billion, exceeding the average estimate of $7.18 billion [4] Stock Performance - Cisco shares have returned +6.3% over the past month, outperforming the Zacks S&P 500 composite's +3.1% change, with a Zacks Rank 2 (Buy) indicating potential for further outperformance [3]

We have earnings. Cisco results are out. Christina Parts Neville is back with the numbers.Hi, Christina. >> Hi. So, Cisco posting a top and bottom line beat with earnings per share of 99 cents on revenues of 14.67% billion within the quarter.Networking revenue actually grew 12%. They're seeing gross margins, adjusted operating margins falling in line with estimates. The company did uh see growth across all geographies.As for their Q1 revenue guide, that midpoint coming in a little bit higher than street est ...

Core Insights - Cisco reported strong financial results for Q4 and fiscal year 2025, with Q4 revenue of $14.7 billion, a year-over-year increase of 8%, and fiscal year revenue of $56.7 billion, up 5% from the previous year [2][10][16] - The company highlighted significant growth in AI infrastructure orders, which exceeded $800 million in Q4, bringing the total for fiscal 2025 to over $2 billion, more than double the initial target of $1 billion [3][10] - Cisco's gross margins and operating margins were at the high end of guidance, with GAAP gross margin at 65.7% and non-GAAP gross margin at 68.4% for Q4 [10][12] Financial Performance - Q4 FY 2025 GAAP results showed net income of $2.8 billion, a 31% increase year-over-year, and diluted EPS of $0.71, also up 31% [4][14] - Non-GAAP net income for Q4 was $4.0 billion, a 12% increase, with non-GAAP EPS of $0.99, a 14% increase [5][14] - For the entire fiscal year 2025, GAAP net income was $10.5 billion, a 1% increase, and GAAP EPS was $2.61, a 3% increase [6][16] Revenue Breakdown - Q4 revenue consisted of $10.9 billion from products (up 10% year-over-year) and $3.8 billion from services (flat year-over-year) [9][29] - Geographic revenue performance showed the Americas up 9%, EMEA up 4%, and APJC up 7% [11][26] - Product revenue growth was driven by Networking (up 12%), Security (up 9%), Observability (up 4%), and Collaboration (up 2%) [11][29] Cash Flow and Capital Allocation - Operating cash flow for Q4 was $4.2 billion, a 14% increase compared to the same quarter last year [15] - Cisco returned $2.9 billion to shareholders in Q4 through share buybacks and dividends, declaring a quarterly dividend of $0.41 per share [19][35] Guidance - For Q1 FY 2026, Cisco estimates revenue between $14.65 billion and $14.85 billion, with GAAP EPS guidance of $0.63 to $0.68 [20][21] - For FY 2026, the company projects revenue between $59.0 billion and $60.0 billion, with GAAP EPS guidance of $2.79 to $2.91 [22][23]

Market Overview - The S&P 500 and Nasdaq reached new record highs, with the S&P 500 closing at 6,445.76 points, marking its 16th record close of the year [4][11] - The recent rally was fueled by lower-than-expected inflation data, which raised hopes for a potential rate cut in September [5][7] Economic Indicators - The Consumer Price Index (CPI) rose 0.2% in July, lower than the expected 0.3% increase, and year-over-year CPI rose 2.7%, also below the consensus estimate of 2.8% [5] - Core CPI, excluding food and energy, increased by 0.3% in July, aligning with expectations, while year-over-year core CPI rose 3.1%, slightly above the anticipated 3% [6] Investor Sentiment - There is a growing optimism among investors regarding rate cuts, with a 94% chance of a 25-basis point cut in September, up from 85% prior to the CPI report [7][11] - The S&P 500 has rebounded significantly after nearing bear market territory in April, gaining 2.8% in the past month and 9.6% year-to-date [9] Investment Opportunities - Recommended S&P 500 stocks with strong growth potential for 2025 include: - **Adobe Inc. (ADBE)**: Expected earnings growth rate of 12% for the current year, Zacks Rank 2 [12] - **Microsoft Corporation (MSFT)**: Expected earnings growth rate of 12.3%, Zacks Rank 2 [14] - **Broadcom Inc. (AVGO)**: Expected earnings growth rate of 36.1%, Zacks Rank 2 [16] - **Analog Devices, Inc. (ADI)**: Expected earnings growth rate of 16%, Zacks Rank 2 [18] - **Arista Networks, Inc. (ANET)**: Expected earnings growth rate of 23.8%, Zacks Rank 1 [20]

Investment Recommendation - The firm has a buy rating on Cisco stock with a $76 price target, representing an approximate 5% increase from the current trading price [1][2] - The current price target may be adjusted based on the upcoming earnings report and future expectations [3] - Investors have the option to consider further upside potential or determine if the stock has reached its peak [4] Market Dynamics and Growth Drivers - The industry is experiencing an infrastructure cycle, evidenced by positive results and raised guidance from companies like Arista and Sienna [1] - Cisco's cloud orders doubled last quarter, increasing from $350 million to $600 million, with expectations for continued growth [2] - The infrastructure cycle is expected to drive revenue, profits, and share prices [2] - AI and data growth are key drivers of the infrastructure boom, extending beyond cloud [7] Networking Segment Performance - Networking accounts for approximately 70% of Cisco's product revenues [5] - Order growth in networking has been outpacing revenue growth in recent quarters [6] - Revenue growth in networking is expected to accelerate this quarter, with guidance anticipated to increase in subsequent quarters due to strong historical order growth [6]