⚙️ I have been following Cisco $CSCO for a while. Yesterday, its stock fell more than 9% after earnings, even though they were not bad at all.

The company posted quarterly revenue of $17.25 billion, up 18% year over year and above market expectations. Adjusted earnings of $1.22 per share also beat estimates. AI remains very strong – in just the last quarter, Cisco secured $4 billion in AI infrastructure orders from hyperscalers, bringing the full fiscal year total to $9.3 billion.

The outlook is not bad either. For fiscal 2027, Cisco expects revenue of $72.2–73.4 billion, which is above previous Wall Street expectations.

The main problem is margins. AI infrastructure is growing fast, but it is more hardware with lower margins, and at the same time prices of some components are rising. Gross margin already fell in Q4 from 68.4% to 66.3%, and the outlook for the next quarter calls for 65–66%.

Cisco shows it can really profit from the AI boom and orders are growing at a tremendous pace, but after strong stock gains this year, simply beating expectations is apparently no longer enough.

Does anyone follow Cisco long-term, or does this company not interest you at all?