Will Cisco’s Stock Increase After Tonight’s Q2 Earnings?

Cisco’s call has wrapped up. There wasn’t much movement in the aftermath.

As noted earlier, the bulk of changes occurred as Cisco discussed decreasing gross margins due to memory costs.

The company seems to be another casualty of mounting component expenses.

Interestingly, Cisco is hitting record highs, buoyed by AI demand.

Yet, it’s also suffering from heightened AI demand. The quickly rising need for AI is pushing up component costs, which in turn affects profits.

Overall, while the revenues are notable, Cisco may be more a victim of its own success than any external factors.

Now, quoting Cisco’s remarks on the phone call that seem to show a decline in performance.

Simply put, the company is feeling the pinch from rising memory prices.

“Total non-GAAP gross margin fell 120 basis points year-over-year to 67.5%. Non-GAAP product gross margin was 66.4%, down 130 basis points mainly due to the adverse impact of rising memory costs, though increased productivity helped mitigate some of this. Non-GAAP services gross margin was 70.9%, down 70 basis points. We’re focused on enhancing profitability with a non-GAAP operating margin of 34.6%, which is above our guidance range. The non-GAAP tax rate for the quarter stood at 19%,” they said.

Memory stocks are thriving but have certainly harmed others in the sector.

Cisco shares dropped 8% as financial results are being discussed.

Look for updates on our earnings announcements in this live blog. Keeping this page open will allow for real-time updates.

We’ll soon have the latest information on financial results.

We’re still getting updates on Cisco’s earnings release, which is coming up next. If this live blog is keeping you interested, there are other avenues to get the latest from Wall Street.

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As trends gain speed in 2026, you might want to look at top AI stocks. We have a report on that as well, showcasing companies worth your attention. The growth rates this earnings season are looking significant.

Cisco’s second quarter had some downsides: Operating cash flow decreased 19% year-on-year to $1.8 billion, a noticeable drop from robust sales and profit growth. While not reflected in the headline figures, this indicates potential working capital strains that could impact future margins.

The Security segment dropped 4% to $2 billion, contrasting sharply with a 21% surge in networking sales. This decline raises doubts about Cisco’s ability to safeguard its security business, which is vital in the evolving AI landscape, especially with competitors like Palo Alto and CrowdStrike gaining traction.

Meanwhile, a full-year sales forecast was raised to between $61.2 billion and $61.7 billion, and the outlook includes the effect of tariffs. This suggests that if tariff conditions worsen, estimates may need to be revised down.

Here’s a glimpse of Cisco’s less-than-stellar numbers:

• Full-year EPS is projected between $4.13 and $4.17, marginally above Wall Street’s estimate.
• Next quarter’s EPS guidance is $1.02 to $1.04, exactly hitting the expectations.

Cisco highlighted some growth areas, including an 18% increase in product orders and $2.1 billion in AI infrastructure orders, although these may get overshadowed by other concerns.

CSCO | Highlighted Earnings for Q2 2026:

• Adjusted EPS: $1.04 (est. $1.02) [✅]; up 11% from last year
• Revenue: $15.3 billion, reflecting a 10% annual increase
• Adjusted gross profit: 67.5% (expected 66.0%) [✅]; up 20bps year-over-year
• Net profit: $3.2 billion, a 31% increase from last year
• Operating profit: $3.8 billion; up 21% from last year
• Operating profit margin: 24.6%; a 230 bps increase year-over-year
• Free cash flow: $1.8 billion; down 19% from last year
• Effective tax rate: 12.9% (15.9% YoY)
• Dividend: $0.42 per share; a 2% increase from the previous quarter

Q3 2026 Outlook:

• Revenue: $15.4 billion to $15.6 billion (est. $15.5 billion) [✅]
  • This projection indicates strong demand across all customer segments and regions.
  • Anticipated growth from AI infrastructure orders and network refresh cycles.

Second Quarter Segment Results:

• Americas revenue: $8.845 billion; up 8% YoY
• EMEA revenue: $4.425 billion; a 15% increase from the previous year
• APJC revenue: $2.08 billion; up 8% YoY
• Product revenue: $11.642 billion; a 14% increase from last year
• Service revenue: $3.77 billion; down 1% from last year

Other Key Metrics for Q2:

• Adjusted operating profit: $5.3 billion; a 9% YoY increase
• Adjusted operating expenses: $5 billion; up 6% from last year
• R&D expenses: $2.355 billion; a 2% increase YoY
• Cash and cash equivalents: $15.8 billion
• Remaining performance obligations: $43.4 billion; a 5% increase YoY
• Deferred revenue: $28.4 billion; up 2% YoY
• Return of capital to shareholders: $3 billion in buybacks and dividends

CEO Comments:

• Chuck Robbins: “Cisco’s strong second quarter and first half of fiscal 2026 highlights the strength of our portfolio and our vital role in connecting and protecting our customers in this rapidly changing landscape.”

CFO Comments:

• Mark Patterson: “In the second quarter, we achieved double-digit growth in both revenue and profit, exceeding our highest guidance and positioning us for record sales in fiscal 2026.”

AppLovin is facing challenges. Despite generally solid profits, advertising and software companies seem to be under pressure this earnings season.

Next quarter’s guidance is $15.5 billion, higher than consensus predictions.

Gross profit margins may be somewhat lower than anticipated.

Yearly forecast has been adjusted to $61.2 billion to $61.7 billion, with EPS now between $4.13 and $4.17.

The stock is currently in decline, down 3.8%.

Cisco’s stock has seen notable fluctuations, currently showing a slight 0.5% increase.

We’ll keep analyzing the earnings, although there wasn’t an immediate and significant market reaction following the announcement.

Here’s the reported data:

• EPS: $1.04
• Revenue: $15.3 billion

Wall Street’s predictions were:

• EPS: $1.02
• Revenue: between $15.1 billion and $15.4 billion

Although Cisco generated another profitable quarter, the stock price dipped by 2% initially.

Cisco might see some fluctuation post 4:00 p.m., but it’s anticipated around 4:05 p.m. ET. So, any movement right after the earnings call may be just fluctuations. Once the earnings data is made public, we will keep this live blog updated with fresh details.

With just 20 minutes until Cisco’s Q2 2026 earnings report, market predictions are giving Cisco a 91% chance of surpassing Wall Street’s EPS target.

Cisco has a history of surpassing its past revenue figures, so there’s some justified optimism. However, the largest market reactions will hinge on whether Cisco adjusts its full-year outlook or updates its AI spending forecasts, potentially prompting Wall Street to revise its projections for 2027 and beyond.