Cisco (CSCO) has a long history, having gone public back in 1990. The company saw massive growth during the dot-com bubble, but then it faced a significant downturn. Many tech leaders from that era have vanished, yet a few, like Apple (AAPL), Amazon (AMZN), and IBM, have remained. Cisco is still in the game too, although it doesn’t exactly shine alongside the likes of Nvidia these days. Why is that? Well, for some context, AAPL, AMZN, and IBM all hit their previous highs—2000 peaks—in 2004, 2009, and 2010, while CSCO only just surpassed its 2000 peak this past February. A lot of folks might not even realize this because the comeback has been a long haul. Perhaps it’s worth paying attention to.
Let’s dive into the short-term chart. We initially shared this information with CappThesis customers just a couple of days ago when CSCO was forming a bullish pattern. The stock is slowly recovering, especially from the revenue downturn earlier this year. While it might have slipped off some traders’ radars, it seems to be shaping up in what looks like a cup-and-handle formation. I certainly saw potential in the breakout that happened Tuesday.
The stock’s movement above its trading range is setting a conservative price target around $86.60. This shift back to the previous gap often prompts increased buying momentum, as investors eye the possibility of a return to earlier highs. The trading strategies I shared this month helped me avoid taking premature risks, waiting instead for evidence of positive momentum in both the stock’s performance and the market overall. We’re aligning our strategy for CSCO similarly, although with some flexibility since the company won’t report its next earnings until May.
Looking back to the 2002 period, Cisco has struggled in comparison to the Nasdaq 100 (NDX) for quite some time, so it may take a while to affect long-term trends. Initially, the objective is to leverage the bullish pattern noticed in the CSCO/NDX chart. There have been fleeting moments of solid business performance. This stock does seem to have another opportunity to regain ground against the NDX, particularly with its recent strength, while many competitors are finding it tough.
So, what are the possibilities for Cisco to outgrow its 2000 peak now? If we examine a different long-term chart that illustrates percentage changes, some crucial insights emerge. Cisco has risen about 1,000% from its lows in October 2002, which stands out, but it pales compared to its performance prior to the dot-com crash. Between July 1994 and March 2000, its stock soared nearly 1,600% in under six years—a clearly unsustainable surge. In contrast, the current 1,000% gain has unfolded over approximately 23.5 years, reflecting a steadier climb, especially after a near 90% drop.
This highlights the importance of assessing multiple timeframes. Cisco has reached a new all-time high, but the increase has been gradual, rather than explosive. If the stock can maintain these recent gains, capitalize on short-term bullish formations, and keep its upward momentum, the potential for a more significant move beyond previous heights becomes increasingly plausible. A continued trend of outperformance relative to the NDX would be a major shift, something Cisco hasn’t seen for most of the last two decades.
