Market Overview - U.S. stocks experienced a significant decline on February 12th, 2026, with the Dow Jones Industrial Average falling 1.03% to 49,605.19, the S&P 500 down 1.13% to 6,862.95, and the Nasdaq Composite dropping 1.61% to 22,695.23, driven by concerns over artificial intelligence's impact on corporate profits and anticipation of inflation data [1][2] Corporate Movers - Cisco Systems (CSCO) saw its stock drop approximately 10% despite exceeding earnings expectations, primarily due to disappointing forward guidance that raised growth concerns [3] - AppLovin (APP) experienced a dramatic sell-off, with shares tumbling around 18.3% despite reporting stronger-than-expected profits, reflecting market anxieties about AI disrupting software business models [4] - Micron Technology (MU) had a positive stock movement following optimistic comments from its CFO regarding next-generation HBM4 memory production, a key component for AI infrastructure [5] - McDonald's (MCD) shares rose after reporting stronger-than-anticipated profits, while Walmart (WMT) also performed well, contributing positively to the S&P 500 [6] - Tenet Healthcare Corporation (THC) surged after a strong earnings report, and T-Mobile US, Inc. (TMUS) rose after beating earnings estimates, while Shopify Inc. (SHOP) and Moderna, Inc. (MRNA) faced declines due to missing earnings expectations and FDA decisions, respectively [7] Sector Movements - In the energy sector, coal stocks like Peabody Energy (BTU) and Hallador Energy (HNRG) gained momentum following executive orders from the Trump administration aimed at supporting the coal industry [8] Economic Outlook - The upcoming U.S. Consumer Price Index (CPI) release is expected to significantly influence market direction, with investors closely monitoring it for signs of inflationary pressures, which will impact the Federal Reserve's interest rate decisions [9]

Core Viewpoint - Cisco Systems shares experienced a significant decline of up to 12% due to rising memory prices impacting the company's margins, marking the stock's worst performance since 2022 [1] Group 1: Market Conditions - Strong demand for artificial intelligence chips from Nvidia has led to a global memory shortage, causing costs to increase dramatically for this component [2] - Large orders for data center memory have restricted production capacity for other devices, including smartphones, creating broader market implications [2] Group 2: Impact on Cisco - Cisco is facing challenges due to the memory price increases, as highlighted by CEO Chuck Robbins during the earnings call, where he mentioned plans to raise prices, revise contracts, and negotiate terms to adapt to changing component prices [3] - Despite reporting better-than-expected quarterly results, Cisco's shares fell approximately 7% following a mediocre forecast, with product gross margin for the quarter reported at 66.4%, down 130 basis points from the previous year, primarily due to negative impacts from product mix and higher memory costs [4]

Core Viewpoint - Cisco Systems has successfully transformed from a hardware-centric company to a diversified software and services powerhouse, reflecting a significant evolution in its business model and market positioning [1][2][3]. Group 1: Company Evolution - Cisco has shifted focus towards recurring revenue models, with over 50% of its revenue now driven by subscriptions, particularly in observability and cybersecurity following the acquisition of Splunk for $28 billion in 2024 [3][4]. - The company has capitalized on the AI infrastructure boom, enhancing its Ethernet switching and AI-optimized networking solutions, which are gaining traction among hyperscalers [4]. - Cisco's annual recurring revenue (ARR) has shown steady growth, supported by its strategic pivots and investments in AI networking [4][13]. Group 2: Financial Performance - In the fiscal second quarter, Cisco reported revenue of $15.35 billion, a nearly 10% increase year-over-year, surpassing consensus estimates of $15.12 billion [9]. - Earnings per share reached $1.04, up 11% from the previous year, exceeding forecasts by $0.02 [9]. - The company highlighted $2.1 billion in AI infrastructure orders for the quarter, raising full-year expectations to over $5 billion, indicating strong demand from hyperscalers [9][10]. Group 3: Market Position and Outlook - Despite a dip in shares following earnings, Cisco's diversified exposure across networking, security, and observability provides stability amid tech sector volatility [7][10]. - The company projects Q3 FY2026 revenue between $15.4 billion and $15.6 billion, reflecting a 5-7% year-over-year growth, with adjusted earnings expected between $1.02 and $1.04 [10]. - Cisco's recent dividend increase of 2% to $0.42 per share reinforces its commitment to shareholder returns and reflects its underlying financial health [13][14].

Networking giant Cisco Systems is the latest tech firm to see its stock drop after revealing it's grappling with the impacts of a global memory shortage. ...

Market Overview - Wall Street experienced declines, particularly in technology stocks, with a notable rotation into cyclical sectors like industrials, which are performing strongly [1] - Key holdings in the portfolio, including Dupont, Dover, Honeywell, Linde, GE Vernova, and Eaton, have shown extraordinary year-to-date performance, while the S&P 500 has only slightly increased [1] Portfolio Management - The decision to trim positions in Eaton and Procter & Gamble was made to maintain portfolio discipline as these stocks benefited from the market rotation [1] - A prior decision to reduce Cisco holdings before its earnings report was validated as shares fell over 10% following the announcement [1] Cisco's Performance - Cisco reported a strong quarter with networking order growth exceeding 20%, marking six consecutive quarters of double-digit growth, driven by AI hardware demand [1] - Despite the positive growth, a dip in gross margins due to rising memory prices caused concern among investors [1] - Management's actions to leverage pricing power and robust order growth led to an increase in full-year earnings guidance, indicating a commitment to long-term performance [1] Impact on Related Companies - Apple shares fell over 3% in response to Cisco's warning about memory prices, with PC makers Dell Technologies and HP Inc. experiencing even larger declines of 9% and 6%, respectively [1] - Memory prices are a critical factor for these companies, raising concerns about future margins [1] Apple Developments - Apple is facing challenges with the rollout of the Siri upgrade, which is now expected to be staggered throughout the year instead of a full launch in March [1] - Despite the delay, strong iPhone sales are ongoing, suggesting that the slower Siri rollout may not significantly impact Apple's overall performance [1] - The partnership with Google's Gemini AI models has created optimism regarding the potential value of the Siri upgrade [1]

Core Insights - Cisco Systems (CSCO) reported second-quarter fiscal 2026 non-GAAP earnings of $1.04 per share, exceeding the Zacks Consensus Estimate by 1.96% and reflecting a year-over-year increase of 10.6% [1][10] - Revenues reached $15.35 billion, surpassing the Zacks Consensus Estimate by 1.49% and showing a year-over-year growth of 9.7% [2][10] Revenue Breakdown - Total Annual Recurring Revenues (ARR) were $31 billion, up 3%, with product ARR growth of 6% [2] - Total subscription revenues amounted to $7.83 billion, representing 51% of Cisco's total revenues [2] - Software revenue increased significantly by 36.9% year over year to $5.6 billion [2] Segment Performance - Networking revenues were $8.29 billion, up 21% year over year [3] - Security revenues decreased by 4% year over year to $2.01 billion [3] - Collaboration revenues increased by 6% year over year to $1.05 billion [3] - Observability revenues remained stable at $277 million year over year [3] Product and Service Revenue - Total product revenues were $11.64 billion, accounting for 75.8% of total revenues, with a year-over-year increase of 13.8% [4] - Service revenues were $3.70 billion, making up 24.2% of total revenues, down 1.3% year over year [4] Geographic Performance - Revenues from the Americas increased by 8% year over year to $8.84 billion [5] - EMEA revenues climbed 15% year over year to $4.42 billion [5] - APJC revenues rose by 8% year over year to $2.08 billion [5] Operating Metrics - Non-GAAP gross margin for the second quarter was 67.5%, a contraction of 120 basis points year over year [6] - Non-GAAP operating income was $5.31 billion, reflecting a year-over-year increase of 9.3% [7] - Operating margin contracted by 10 basis points year over year to 34.6% [7] Financial Position - As of January 24, 2026, cash and cash equivalents totaled $15.8 billion, up from $15.7 billion as of October 25, 2025 [8] - Total debt increased to $30 billion from $28.1 billion over the same period [8] Remaining Performance Obligations - Remaining performance obligations (RPO) were $43.4 billion, up 5% year over year [9] - Product RPO increased by 8% year over year, with long-term RPO at $11.8 billion, up 11% year over year [9] Future Guidance - For Q3 fiscal 2026, Cisco expects non-GAAP earnings between $1.02 and $1.04 per share, with revenues projected in the range of $15.4 billion to $15.6 billion [12] - For fiscal 2026, the company anticipates non-GAAP earnings between $4.13 and $4.17 per share and revenues between $61.2 billion and $61.7 billion [12] Shareholder Returns - In Q2 fiscal 2026, Cisco returned $3 billion to shareholders through share buybacks and dividends [11]

Market Overview - Major stock indices experienced significant declines, with the Dow down 496.77 points (1.0%) at 49,624.63, the Nasdaq down 341.43 points (1.5%) at 22,725.04, and the S&P 500 down 68.04 points (1.0%) at 6,873.43 [1] Technology Sector - The sell-off was partly driven by a steep drop in Cisco Systems (CSCO), which fell by 10.7% despite reporting better-than-expected fiscal second-quarter results, as the company provided disappointing guidance for the current quarter [2] - The NYSE Arca Networking Index declined by 3.0% due to Cisco's performance [2] Transportation and Other Sectors - Transportation stocks saw a substantial decline, with the Dow Jones Transportation Average down by 5.1% [3] - Gold stocks weakened significantly, reflected by a 3.9% slump in the NYSE Arca Gold Bugs Index, attributed to a sharp decline in gold prices [3] - Financial, biotechnology, and oil service stocks also faced considerable weakness, while telecom and utilities stocks showed resilience against the downward trend [3] Economic Indicators - The Labor Department reported that initial jobless claims decreased to 227,000, down by 5,000 from the previous week's revised level of 232,000, which was less than economists' expectations of a drop to 220,000 [4][5] - Existing home sales pulled back more than expected in January, as reported by the National Association of Realtors [5] Inflation Outlook - Forecasts suggest that the core Consumer Price Index (CPI) could ease to around 2.5%, marking a near five-year low, which could influence market dynamics if inflation aligns with or falls below expectations [6] - A softer inflation print could maintain rate cuts and potentially restore upward momentum in risk assets [6] International Markets - In Asia-Pacific trading, South Korea's Kospi rose by 3.1%, while Hong Kong's Hang Seng Index fell by 0.9%, and Japan's Nikkei 225 Index closed marginally lower [6] - European markets showed mixed results, with the U.K.'s FTSE 100 Index down by 0.6%, while Germany's DAX Index rose by 0.1% and France's CAC 40 Index increased by 0.5% [7] Bond Market - Treasuries moved back to the upside, with the yield on the benchmark ten-year note down by 4.7 basis points at 4.125% [7]

Key Takeaways Cisco fell 7% post Q2 beat as fiscal 2026 revenue outlook missed Wall Street expectations. Cisco expects up to $61.7B in fiscal 2026 revenues and over $3B AI revenues from hyperscalers.Investors may consider ETFs like IYZ and CIBR to gain exposure while limiting single-stock risk. Shares of Cisco Systems (CSCO) slipped 7% in extended trading yesterday (as cited in CNBC), despite the company beating analysts’ expectations on both the top and bottom lines in the second quarter of fiscal 2026. Th ...

Cisco stock (NASDAQ: CSCO) slumped over 7% in the pre-market trading on Thursday despite its latest quarter ticking all the right boxes on headline numbers. The networking giant posted double-digit re... ...

Company Performance - Cisco Systems (CSCO) stock fell over 7% due to a gloomy profit outlook despite a rise in sales, with expectations of margin pressure from memory costs linked to AI datacenter spending [2][10] - Cisco raised its full-year earnings per share guidance to $3.00 to $3.08 on revenue of $61.2 billion to $61.7 billion, but this was below Wall Street's expectations of $3.12 on revenue of $62.1 billion [10][11] - McDonald's (MCD) shares nudged lower despite beating earnings expectations [5] - AppLovin (APP) shares fell 5% after its fourth-quarter earnings release, which beat Wall Street estimates, marking a nearly 30% decline over the past month [7] Market Trends - US stock futures rose approximately 0.3% as investors assessed earnings and anticipated Friday's inflation reading, which could influence rate-cut expectations [1] - The upcoming Consumer Price Index report is being closely watched, as a softer reading may indicate easing price pressures while maintaining economic growth [3] - Jobless claims data is also in focus following a strong January jobs report, which showed the US economy added twice as many jobs as expected, complicating Federal Reserve policy expectations [4] Competitive Landscape - Micron (MU) stock rose 3% after the CEO addressed competition concerns in the memory chip market, particularly from Samsung Electronics, which is competing to supply AI chips to Nvidia [6]