Cisco Sales Forecast Tops Estimates, Will Cut 5% of Jobs

Summary

Cisco reported a better-than-expected sales forecast, driven by strong hyperscaler spending, and announced a restructuring to focus on growth areas like AI and security. The stock surged after hours. Analyst Lindsey Bell sees the outlook as positive with room to run, but warns of potential headwinds from memory cost peaking and a bifurcated market where consumer cyclicals and financials underperform.

• Cisco's Q4 sales forecast beat estimates, boosting shares 13%+ after hours.
• Hyperscaler revenue expected to reach $9 billion in fiscal year, a major growth driver.
• Cisco plans to cut fewer than 5% of jobs to reinvest in silicon optics, security, and AI.
• Gross margins appear to be stabilizing after previous memory cost issues.
• Analyst Lindsey Bell is bullish on Cisco, citing the strong hyperscaler pipeline and restructuring.
• She notes memory costs may have peaked, which could indicate a peak in AI growth.
• Broader market is K-shaped: tech, energy, materials outperform; consumer cyclicals and financials under pressure.
• Consumer inflation data and gasoline prices are weighing on consumer-facing sectors.