Cisco Systems saw its stock climb 2.2% to close at $86.66 on Monday, trading within striking distance of its 52-week high. The move comes as investors position themselves ahead of the networking giant's fiscal second-quarter earnings release, scheduled for after the market closes on Wednesday, February 11.
Earnings Expectations and Options Activity
Wall Street analysts, on average, anticipate earnings of $1.02 per share on revenue of $14.88 billion for the quarter. Notably, activity in the options market suggests traders are bracing for significant price movement, with implied volatility pointing to a potential swing of nearly 6% in either direction following the report.
Analyst Optimism and AI Focus
Adding to the pre-earnings momentum, JPMorgan increased its price target on Cisco to $95 from $90, maintaining an Overweight rating. Analyst Samik Chatterjee cited potential for revenue acceleration and the company's artificial intelligence initiatives, including its partnership with Nvidia, as key drivers. The market will be closely watching for updates on AI infrastructure demand and the conversion of the company's order backlog.
Investor focus extends beyond headline numbers to underlying business trends. Key concerns include whether demand is broadening beyond initial large-scale AI deployments and the health of orders in Cisco's core enterprise networking segment. The competitive landscape remains intense, with rivals like Arista Networks and Juniper Networks vying for the same corporate budgets.
The upcoming report will be pivotal in determining if the recent bullish sentiment is warranted. With the stock trading near its highs, the market's reaction may hinge on management's forward-looking commentary and tangible evidence of AI-related growth.
