We recently published 11 Stocks Jim Cramer Talked About. Cisco Systems Inc. (NASDAQ:CSCO) is one of the stocks Jim Cramer recently discussed. Networking hardware equipment manufacturer Cisco Systems Inc. (NASDAQ:CSCO) reported its fiscal first-quarter earnings report on Wednesday. The results saw the firm report $14.88 billion in revenue and $1 in EPS which beat analyst estimates of $14.77 billion and $0.98. Citing orders from hyperscalers, Cisco Systems Inc. (NASDAQ:CSCO) outlined that its networking bus ...

Core Viewpoint - Cisco has shown a year-to-date increase of over 20%, although it is slightly lagging behind the broader tech sector ETF, which has increased by 24% [2]. Company Performance - Cisco is performing well compared to other companies in the networking hardware space, ranking near the top against competitors like Arista Networks, Palo Alto Networks, HP Enterprise, and Fortinet [2]. - Cisco's stock chart indicates a breakout point around 66, with a recent high of 84.84, but the stock has retreated from these highs [3][4]. Technical Analysis - The current trading range for Cisco is between recent lows of 70.54 and highs near 72.50, with traders focusing on this range for the session [5]. - The 21-day exponential moving average is currently near 71.20, indicating a bullish trend as the stock remains above the 50 midline [6][7]. - The expected move for December's monthly expiration is approximately 8.7%, with breakout points identified near 72.50 and a top range around 78 [8]. Earnings Expectations - Cisco's networking segment is projected to grow nearly 9%, which is a slowdown from the previous quarter's 12% year-over-year growth. The cybersecurity segment is expected to grow about 11% [10]. - The stock is near 25-year highs, indicating elevated expectations going into the earnings report [9]. Options Strategy - A suggested options strategy involves buying a directional call vertical with a bullish bias, utilizing the December monthly option series, which has about 37 days to expiration [11][12]. - The strategy includes buying a call at the 72.50 strike and selling a call at the 80 strike, resulting in a risk of approximately $225 per spread, with a break-even point at 74.75, just over 3% above the current share price [13][14]. - This approach allows for flexibility in trade management, as the position can be closed early if the necessary price movement occurs [15].

Core Insights - Broadcom (AVGO) and Cisco Systems (CSCO) are experiencing strong demand due to the growth of AI infrastructure, data center expansions, and increasing cybersecurity threats [1][2][3] - Both companies are well-positioned to benefit from projected AI spending, which is expected to reach $1.48 trillion in 2025 and $2.02 trillion in 2026, compared to $987 billion in 2024 [3] Company Performance - Broadcom's AI revenues are projected to increase by 66% year-over-year to $6.2 billion in Q4 fiscal 2025, driven by demand for XPUs and Ethernet products [7][8] - Cisco's AI infrastructure orders reached $2 billion in fiscal 2025, doubling previous expectations, indicating strong market demand [11][12] Product and Technology Developments - Broadcom's XPUs, which are essential for training Generative AI models, accounted for 65% of its AI revenues in Q3 fiscal 2025, with a consolidated backlog of $110 billion [7][10] - Cisco is expanding its AI portfolio with new solutions such as the Unified Nexus Dashboard and 400G bidirectional optics, enhancing its data center capabilities [11][12] Strategic Partnerships - Cisco's partnership with NVIDIA aims to create AI-ready data center networks, integrating Cisco Nexus switches with NVIDIA's Spectrum-X architecture for improved performance [12][13] Earnings Estimates - The Zacks Consensus Estimate for Broadcom's fiscal 2025 earnings is $6.72 per share, reflecting a 38% increase over fiscal 2024 [14] - Cisco's fiscal 2026 earnings estimate has increased to $4.04 per share, suggesting a 6% growth over fiscal 2025 [15] Valuation Insights - Both companies are considered overvalued, with Broadcom trading at a forward price/sales ratio of 20.18X, significantly higher than Cisco's 4.69X [17] Future Outlook - Cisco's aggressive AI initiatives and expanding portfolio are expected to drive top-line growth, while Broadcom's partnerships and AI portfolio expansion are key catalysts for future performance [20]

Core Viewpoint - The U.S. Department of Justice's settlement of its antitrust lawsuit against Juniper Networks removes a significant barrier to Hewlett-Packard Enterprise's $14 billion acquisition of Juniper, although final court approval and a public commentary phase are still pending, pushing the expected closure to Q3 2025 [2][3][4] Acquisition Details - The acquisition is part of HPE's strategy to enhance its AI-driven networking capabilities and compete more effectively with Cisco Systems, with the DOJ initially opposing the merger due to concerns over reduced competition [3] - Under the settlement, HPE will divest its Instant On wireless networking division and license Mist AIOps technology to competitors, which is a notable concession in tech mergers [3] Financial Implications - Juniper shareholders will receive $40 in cash per share upon merger completion, with current stock trading just below this value, limiting potential gains unless there are delays [4][7] - Analysts expect the merger to enhance HPE's earnings within the first year, driven by synergies from scale and integration of Juniper's AI-driven tools into HPE's Aruba Networking division [4][5] Strategic Considerations - HPE CEO views the merger as a strategic advancement, enhancing HPE's position in AI data centers, cloud ecosystems, and telecom networks, despite concerns over reduced vendor diversity for enterprise clients [5] - The success of the merger will depend on HPE's ability to integrate Juniper effectively and how competitors leverage the partial unbundling of Mist AI [5] Valuation Insights - HPE is trading at 0.9x sales and 20.2x earnings, below S&P 500 averages, but has a high price-to-free cash flow ratio of 252.7, indicating poor cash efficiency [6] - Revenue growth has been 4.5% annually over the past three years and 11.8% over the last year, but profitability remains low with operating and net margins of 7.0% and 4.6%, respectively [6][7] Future Outlook - With the DOJ hurdle resolved, Juniper stock is effectively set at $40, and attention now shifts to court approval, execution of divestitures, and signs of synergy in future earnings [7]

Core Viewpoint - Arista Networks' stock experienced a significant decline due to the Trump administration's announcement of new tariff policies, which raised concerns about potential impacts on global trade and the company's cost structure [1][2][3]. Company Performance - Arista Networks' share price fell by 11.1% in a trading session where the S&P 500 dropped by 4.9% and the Nasdaq Composite decreased by 6% [1]. - The company has been experiencing strong sales growth, particularly in relation to artificial intelligence trends, but there are concerns that business performance may fall below previous expectations due to rising costs from tariffs [3]. Financial Guidance - In its last earnings update, Arista Networks projected sales between $1.93 billion and $1.97 billion for the first quarter, with a targeted non-GAAP gross margin of approximately 63% [4]. - The implementation of new tariffs is set to occur after the close of Q1, suggesting that the company may still meet or exceed its sales targets for that period [4]. Outlook and Risks - The new tariff outlook indicates that Arista Networks' gross margin could decline significantly, and sales for the remainder of the year may fall short of analyst expectations [5].