Why Cisco Systems Stock Sank on Thursday

Key Points

• The networking company published the final quarterly earnings report for its fiscal 2025.

• These showed decent gains in revenue and profitability, but investors were hoping for more.

• 10 stocks we like better than Cisco Systems ›

Cisco Systems (NASDAQ: CSCO) wasn't a particularly popular tech stock on Thursday. Investors sold out of the stock following a quarterly earnings report that some found dissatisfying. This sank the share price by more than 1% on a day when the S&P 500 index basically traded flat.

Two slight beats

Cisco unveiled its fiscal fourth-quarter and full-year 2025 results just after market close on Wednesday. These revealed that the storied computer networking company managed to boost its revenue by 8% year over year in the former period to $14.67 billion. That was slightly above the consensus analyst estimate of $14.62 billion.

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Cisco attributed this to growth in overall product orders, which it said was 7% across all its regions. It also flagged artificial intelligence (AI) infrastructure products as growth drivers. In the first half of this calendar year, orders for such products topped $2 billion. This is double -- and then some -- management's target of $1 billion for the period.

On the bottom line, non-GAAP (adjusted) net income landed at $4 billion, shaking out to $0.99 per share. That was 12% higher than the result for the fourth quarter of 2024, and it edged past the average pundit projection of $0.98.

Unsurprising guidance

Cisco also proffered guidance for its current (first) quarter and the entirety of fiscal 2026. It's modeling $59 billion to $60 billion in revenue and adjusted earnings per share of $4.00 to $4.06. This is in line with the consensus analyst expectations of, respectively, $59.5 billion and $4.03.

While Cisco's quarterly performance certainly wasn't bad, it seems investors were expecting more convincing beats and higher guidance, particularly given that AI tailwind.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems. The Motley Fool has a disclosure policy.