Group 1: Technology Sector Performance - The "Magnificent Seven" stocks, including Apple, Meta Platforms, and Amazon, are leading a selloff in the technology sector, with Apple down about 3% and Meta and Amazon down about 2% [1] - The iShares Expanded Tech Software Sector ETF (IGV) has decreased by approximately 3%, now sitting 32% below its recent high, with AI-focused companies like Palantir Technologies and Oracle also contributing to the decline [2] - Networking hardware manufacturers, such as Cisco Systems, are experiencing significant losses, with Cisco down about 11% [2] Group 2: Shift to Old Economy Stocks - Investors are moving towards "old economy" stocks, which include sectors like machinery, financials, and energy, as technology investments appear to be faltering [3] - Companies like Walmart and Boeing have become more attractive to investors, with Walmart up 3% and Boeing up 2% [3] - The Dow Jones Industrial Average, which has limited exposure to technology, recently reached a record high of over 50,000 [3] Group 3: Economic Data and Fed Policy - Economic data is becoming increasingly important, as reports could influence Federal Reserve policy and interest rates, particularly looking ahead to 2026 [4] - A strong U.S. jobs report may have set the stage for a potential rate cut by the Fed in June, although market reactions have been limited [4] - The upcoming consumer inflation report could lead to significant investor reactions, especially if it exceeds forecasts, potentially prompting considerations for a September rate cut [4]

Cisco Systems (CSCO) came out with quarterly earnings of $1.04 per share, beating the Zacks Consensus Estimate of $1.02 per share. This compares to earnings of $0.94 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +1.96%. A quarter ago, it was expected that this seller of routers, switches, software and services would post earnings of $0.98 per share when it actually produced earnings of $1, delivering a surprise of +2.04%.Ove ...

Cisco raises annual resulsts forecast fueled by AI demand | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]The logo of networking gear maker Cisco Systems Inc is seen during GSMA's 2022 Mobile World Congress (MWC) in Barcelona, Spain February 28, 2022. REUTERS/Nacho Doce [Purchase Licensing Rights, opens new tab]Feb 11 (Reuters) - Cisco Systems [(CSCO.O), opens new tab] raised its full-year revenue and adjusted profit forecasts on W ...

Arista Networks, Inc. (NYSE:ANET) is one of the best performing S&P 500 stocks in the last five years. Arista Networks, Inc. (NYSE:ANET) As of February 6, 2026, about 90% of analysts remain bullish on Arista Networks, Inc. (NYSE:ANET), implying a 27.5% upside to a $164.00 consensus price target. Analyst activity was positive ahead of fiscal Q4 2025 results. Arista Networks, Inc. (NYSE:ANET)’s results for fiscal Q4 are expected on February 12, 2026. On January 5, 2026, Piper Sandler upgraded Arista Net ...

Financial Data and Key Metrics Changes - Net sales for the December quarter were $1.186 billion, up 4% sequentially and 15.6% year-over-year, exceeding original guidance [4][15] - Non-GAAP gross margin was 60.5%, up 379 basis points sequentially, while GAAP gross margin was 59.6% [5][16] - Non-GAAP net income was $252.8 million, with earnings per diluted share at $0.44, which was $0.04 above the high end of original guidance [5] - Total operating expenses were $555.2 million, with non-GAAP operating income at 28.5% of sales [5][16] - Cash flow from operating activities was $341.4 million, with adjusted free cash flow at $305.6 million [7][8] Business Line Data and Key Metrics Changes - Sales growth primarily came from networking, data center, FPGA, and licensing business units, while microcontroller and analog businesses were flat sequentially [15] - Distribution sell-through was $11.7 million higher than sell-in, indicating a reduction in distributor inventory [15] Market Data and Key Metrics Changes - Net sales increased sequentially in the Americas and Europe, while remaining flat in Asia [15] - The strongest sales performance was noted in the aerospace and defense sector, as well as networking data center solutions [16] Company Strategy and Development Direction - The company is focusing on modernizing connectivity solutions in automotive and industrial markets, particularly through Ethernet-based architectures [10][12] - A strategic collaboration with Hyundai Motor Group was announced to integrate 10BASE-T1S solutions into next-generation vehicle platforms [12] - The company aims to leverage its comprehensive Ethernet portfolio to capture opportunities in Industry 4.0 and automotive modernization cycles [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery across most end markets, including automotive, industrial, communication, and data center sectors [16] - The company anticipates net sales for the March quarter to be $1.26 billion ±$20 million, representing a 6.2% sequential growth and up 29.8% year-over-year [20] - Management noted challenges with lead times and substrate availability but remains optimistic about future growth [19] Other Important Information - The company expects to maintain a non-GAAP tax rate of about 10% for fiscal year 2026 [6] - Total debt decreased by $12.1 million sequentially, with net debt down by $26 million [8] - Capital expenditures for fiscal year 2026 are expected to be at or below $100 million [9] Q&A Session Summary Question: How should the continued strength versus seasonality be viewed? - Management indicated that distribution inventory is largely corrected, with strong backlog and bookings contributing to confidence in growth [24] Question: Update on inventory reserve and underutilization charges? - Management expects inventory reserves to normalize, with underutilization charges continuing to decline gradually [26] Question: Clarification on December's microcontroller and analog segments? - The upside in December was primarily driven by stronger performance in product segments, not licensing [30] Question: Thoughts on customer inventory behavior? - Management noted that while customers are not restocking yet, they are buying at consumption rates as inventories normalize [40] Question: Backlog for the June quarter? - Management reported that January bookings were strong, and the June quarter backlog is higher than the March quarter backlog at the same point in time [46] Question: FPGA business growth? - The FPGA segment is experiencing significant growth, with the company gaining market share [83]

Core Viewpoint - Federated Hermes Inc. has reduced its stake in Cisco Systems by 18.8% in Q3, indicating a shift in institutional investment sentiment towards the company [2]. Institutional Holdings - Federated Hermes Inc. now holds 255,477 shares of Cisco Systems, valued at $17,480,000 after selling 59,116 shares [2]. - Avantax Advisory Services Inc. increased its position by 1.1% in Q2, owning 420,336 shares worth $29,163,000 after acquiring 4,525 additional shares [3]. - Greystone Financial Group LLC acquired a new stake valued at approximately $8,563,000 in Q3 [3]. - Drive Wealth Management LLC boosted its stake by 2.7% in Q2, now owning 16,605 shares valued at $1,152,000 [3]. - CX Institutional increased its holdings by 11.0% in Q3, owning 144,336 shares valued at $9,875,000 after purchasing 14,334 shares [3]. - Shell Asset Management Co. grew its position by 53.3% in Q2, now holding 77,234 shares worth $5,358,000 [3]. - Institutional investors and hedge funds own 73.33% of Cisco Systems stock [3]. Stock Performance - Cisco Systems stock opened at $78.32, with a market cap of $309.45 billion, a P/E ratio of 29.44, and a beta of 0.87 [4]. - The stock has a 50-day moving average price of $76.75 and a 200-day moving average price of $72.12 [4]. - The twelve-month low and high for the stock are $52.11 and $80.82, respectively [4]. Financial Performance - Cisco reported $1.00 EPS for the latest quarter, exceeding analysts' expectations of $0.98 by $0.02 [5]. - The company generated revenue of $14.88 billion, surpassing estimates of $14.77 billion, with a year-over-year revenue increase of 7.5% [5]. - Cisco's return on equity stands at 27.29%, and its net margin is 18.38% [5]. - The FY 2026 EPS guidance is set at 4.080-4.140, with Q2 2026 guidance at 1.010-1.030 EPS [5]. Dividend Information - Cisco recently paid a quarterly dividend of $0.41 per share, representing an annualized dividend of $1.64 and a yield of 2.1% [6]. - The dividend payout ratio is 61.65% [6]. Insider Transactions - Director Michael D. Capellas sold 16,150 shares at an average price of $77.28, resulting in a total transaction of $1,248,072 [7]. - Insider Jeetendra I. Patel sold 163,896 shares at an average price of $77.86, totaling $12,760,942.56 [7]. - Over the last 90 days, insiders have sold 1,044,865 shares valued at $81,397,635 [7]. Analyst Ratings - Bank of America raised its price target for Cisco from $85.00 to $95.00, maintaining a "buy" rating [9]. - Weiss Ratings reaffirmed a "buy (b)" rating for Cisco [9]. - BNP Paribas Exane increased its price target from $76.00 to $86.00, giving an "outperform" rating [9]. - KeyCorp raised its target price from $77.00 to $87.00, assigning an "overweight" rating [9]. - Cisco has an average rating of "Moderate Buy" with a consensus price target of $86.81 [9].

Industry Overview - Hyperscalers are projected to spend $500 billion on AI-related capital expenditures in 2026, indicating a strong commitment to AI infrastructure development [1] - AI developers are expected to invest $500 billion in infrastructure this year, highlighting the ongoing growth in the sector [1] Company Analysis: Broadcom - Broadcom is a key player in the AI infrastructure value chain, providing essential networking gear, switches, and interconnects for AI data centers [5][6] - The company is involved in designing custom silicon solutions for major developers like Alphabet, Apple, ByteDance, and Meta, enhancing its role in the AI ecosystem [6] - Broadcom has a market cap of $1.6 trillion, with a gross margin of 64.71% and a dividend yield of 0.73%, making it an attractive investment opportunity as analysts rate it a buy [4][8] Company Analysis: Taiwan Semiconductor Manufacturing (TSMC) - TSMC is the largest chip manufacturer globally, holding an estimated 70% market share, and serves as a critical supplier for companies like Nvidia, AMD, and Broadcom [9] - The company has experienced a renaissance, becoming less vulnerable to cyclical trends in the semiconductor industry, with consistent demand driven by AI [11][13] - TSMC's revenue and profitability are accelerating, with management guiding for further growth as the AI infrastructure movement continues [13][14] - The company has a market cap of $1.8 trillion, a gross margin of 59.02%, and a dividend yield of 0.91%, positioning it as a potentially undervalued stock in the AI sector [10][11]

Core Insights - Qorvo reported fiscal 2026 third-quarter results that exceeded management's guidance, highlighting ongoing restructuring efforts aimed at optimizing profitability and reducing capital intensity [5][8] - The company is strategically exiting low-margin Android segments to focus on higher-margin markets such as defense and aerospace, forecasting a significant decline in Android revenue for fiscal 2027 [7][14] Financial Performance - Qorvo's fiscal Q3 revenue was $993 million, with a non-GAAP gross margin of 49.1% and non-GAAP diluted earnings per share of $2.17, which were better than previous guidance [4][8] - Inventory at the end of the period was $530 million, down $75 million sequentially and down $111 million year-over-year [2] - The company ended the quarter with approximately $1.3 billion in cash and equivalents and $1.5 billion in long-term debt, with no near-term maturities [3] Strategic Initiatives - The closure of the Costa Rica facility was completed ahead of schedule, with production transitioned to external partners [1] - Qorvo is consolidating its manufacturing operations, including moving SAW filter production to Texas and divesting its MEMS business [6][19] - The company aims to achieve a gross margin exceeding 50% and EPS approaching $7 in fiscal 2027, driven by a shift towards defense and aerospace markets [7][26] Market Dynamics - Qorvo's largest customer accounted for approximately 53% of revenue during the quarter, with content gains supporting double-digit revenue growth compared to the previous year [3][10] - The company is experiencing a decline in Android revenue, with expectations of a $300 million drop in fiscal 2027 due to strategic exits and memory pricing impacts [14][15] - In the Connectivity Systems Group, Qorvo is advancing its automotive ultra-wideband program and has received initial production orders [17] Future Guidance - For fiscal Q4, Qorvo guided revenue of approximately $800 million, with a non-GAAP gross margin between 48% and 49% and non-GAAP EPS around $1.20 [6][22] - Looking ahead to fiscal 2027, the company anticipates a mid-single-digit decline in full-year revenue, with a significant shift in revenue mix towards defense and aerospace [26]

Core Viewpoint - Zensar Technologies Ltd is experiencing reduced business from Cisco Systems, one of its top clients, due to Cisco's vendor rationalization and cost-cutting measures, which is impacting growth prospects for mid-tier IT outsourcers [1][2][4]. Company Summary - Zensar is expected to lose a portion of its $40 million annual revenue from Cisco, which constitutes approximately 6% of its total business, as Cisco reduces the number of IT vendors it collaborates with [4][6]. - The company reported a revenue of $160.5 million in Q3FY26, reflecting a 1.4% sequential decline, primarily attributed to weakness in the telecom, media, and technology (TMT) sector, which accounts for about 20% of its total business [5][6]. - Zensar's revenue from Cisco has been declining, which could hinder its goal of reaching $1 billion in revenue [4][20]. - The management acknowledges the shift in client spending towards automation and AI-related investments, moving away from traditional IT services [16][20]. Industry Summary - Zensar's challenges are part of a broader trend affecting other Indian IT services companies, particularly mid-sized firms, which have also reported reduced business from major clients [2][9]. - Companies like Sonata Software and LTIMindtree are similarly facing decreased business from significant clients, indicating a widespread issue in the industry [10][11]. - The pressure is beginning to extend to larger players, with Infosys expected to lose substantial revenue from a major client starting next year [13]. - Analysts express caution regarding Zensar's growth prospects, noting that the company has experienced revenue declines in two of the last five years [17][19].

Core Viewpoint - Super Micro Computer (SMCI) stock has experienced significant volatility, with a current price reflecting a 51% correction from its 52-week high of $66.44, primarily due to a revenue miss in Q1 [1] Financial Performance - For Q1 FY26, SMCI reported revenue of $5 billion and expects full-year revenue of $36 billion [3] - The company has guided for Q2 revenue between $10 billion and $11 billion, which exceeds analyst consensus by over $2 billion [5] Market Sentiment - Despite the bearish sentiment, SMCI stock is considered attractively valued and could be a candidate for a short squeeze in 2026 [2] - SMCI is currently the third-most-shorted stock by hedge funds, indicating strong negative sentiment in the market [1] Operational Insights - SMCI has a strong global presence, operating in over 100 countries, and is pursuing aggressive expansion with new facilities in the U.S., Taiwan, the Netherlands, Malaysia, and the Middle East [3][6] - The company aims to scale production to 6,000 racks per month by the end of fiscal 2026 [6] Recent Stock Performance - Following a significant earnings miss in Q1 and cash used in operations of $918 million, SMCI stock has corrected by 45% over the last six months, presenting a potential accumulation opportunity [4]