Cisco closes at record $96.57 ahead of Q3 earnings as AI orders climb

Cisco Systems shares closed at a record $96.57 on Friday, rising 4.8 per cent, as investors positioned ahead of the networking company’s fiscal third-quarter results that are expected to show artificial intelligence infrastructure orders accelerating toward $5bn for the year.

The stock touched an intraday record of $97.02 during the session, pushing past its previous closing high of $92.16. Trading volume reached 24.5 million shares, roughly 10 per cent above the 22.2 million daily average. The shares have risen 58 per cent over the trailing twelve months, lifting Cisco’s market capitalisation to $381bn.

Cisco reports fiscal Q3 results after the market closes on Wednesday, May 13, with the earnings call set for 1:30 p.m. Pacific. Wall Street expects adjusted earnings of $1.04 per share, according to a survey of 20 analysts by AlphaStreet, on revenue of $15.56bn. That figure sits near the upper end of the company’s own guidance range of $15.4bn to $15.6bn.

The rally turns on the AI-order narrative. Cisco booked $2.1bn in AI infrastructure demand from hyperscaler customers in its fiscal second quarter, and UBS projects the company will report another $1bn in AI orders for the third quarter. That would push year-to-date AI orders to $4.4bn, within striking distance of the $5bn full-year target chief executive Chuck Robbins has set out. Robbins described Cisco as providing “trusted infrastructure” for the AI age in the February earnings release.

UBS maintained its Buy rating and a $95 price target, a level the shares have already eclipsed. The firm cautioned that pricier components “might cap gross margin around 66 per cent” despite recent price increases on Cisco’s switching and routing hardware.

Evercore ISI lifted its price target to $110 from $100 and kept an Outperform rating. The firm pointed to “AI-related revenue streams as a critical catalyst,” arguing that Cisco’s role as the networking backbone for hyperscale data centre buildouts gives it durable pricing power even as component costs rise. Evercore’s $110 target implies a further 14 per cent upside from Friday’s close.

The broader S&P 500 and Nasdaq closed at records on Friday, with chipmakers and AI-linked stocks leading the advance after a stronger-than-expected April jobs report.

Cisco’s record comes with the stock already trading well above the consensus analyst price target of $90.29, according to MarketBeat data. The Street is constructive but not euphoric: three analysts rate the stock Strong Buy, 14 rate it Buy, and eight have Hold ratings. Wall Street Zen, a boutique research firm, shifted to Hold from Buy in March. It was the lone recent downgrade, citing valuation after the stock’s extended run.

In the previous quarter, Cisco delivered revenue of $15.35bn, up 9.7 per cent year on year, with adjusted EPS of $1.04 that beat the $1.02 consensus. Product orders jumped 18 per cent, the strongest order growth in over a year. Yet the stock tumbled 9.8 per cent the following day. The February sell-off was driven by a gross margin forecast that came in lighter than expected and a cautious tone on the timing of AI-order conversion to revenue.

The options market is pricing a 5.8 per cent post-earnings swing in either direction, according to Bloomberg data. That implied move is wider than the 4.2 per cent average swing over Cisco’s last eight earnings reports.

Cisco disclosed plans to acquire Astrix Security, an Israeli cybersecurity firm that protects non-human identities: API keys, tokens, and service accounts used by software and AI agents. UBS estimates the deal value at $250m to $350m. Cisco’s chief security officer Peter Bailey described AI agents as “a new attack surface,” a signal that the company intends to fold Astrix into its broader security portfolio alongside Splunk, the $28bn acquisition that closed in 2024.

Robbins and chief financial officer Mark Patterson are scheduled to present at J.P. Morgan’s technology, media and communications conference on May 18 and 19, five days after the earnings release. The AI-order trajectory, gross margin outlook, and any update to the Splunk integration timeline are expected to dominate the conversation.

What to watch on May 13

Analysts will focus on three numbers. The AI-order figure needs to hit or exceed $1bn to keep the $5bn annual target credible. The gross margin is the bogey; the 66 per cent ceiling UBS flagged is the level at which the bull case starts to crack. The full-year revenue guide, currently implied at roughly $62bn, would need an upward revision to justify the record-level stock price.

Arista Networks, Cisco’s closest peer in high-speed data-centre switching, posted a 35.1 per cent revenue jump in its most recent quarter and guided for roughly $2.8bn in the current period. Arista chief financial officer Chantelle Breithaupt described the macro and supply-chain backdrop as “dynamic.” Arista’s results have historically been read-across positive for Cisco’s switching division, though the two address different market tiers. Arista dominates the highest-speed spine-and-leaf deployments. Cisco’s installed base spans campus, branch office, and enterprise core.

Cisco also introduced a research prototype called the Universal Quantum Switch this quarter, a longer-term bet on quantum networking. The prototype is years from commercialisation but shows that Cisco’s research-and-development pipeline extends beyond the current AI-driven Ethernet upgrade cycle that is carrying the stock.

The dividend, raised to $0.42 per share quarterly in February, yields 1.7 per cent at Friday’s close. Institutional ownership stands at 73.3 per cent of outstanding shares, with PNC Financial Services adding 237,187 shares in the first quarter and DJE Kapital adding 655,240 shares, according to regulatory filings.