New York, February 12, 2026, 05:11 EST — Premarket
- Cisco shares dipped in premarket trading as quarterly results reignited scrutiny on margins.
- The company boosted its full-year revenue forecast, highlighting a surge in AI-related orders.
- Traders are eyeing memory-cost pressures, price shifts, and the market open for clues on whether momentum will continue.
Cisco Systems shares tumbled before the U.S. market opened Thursday. By 5:00 a.m. EST, the stock had plunged 7.9% to $78.74, down from its previous close of $85.54. 1
The drop comes at a sensitive time for hardware firms linked to the AI data-center boom. Investors have favored companies directly tied to that spending, but they quickly lose patience once rising costs begin to chip away at profits.
Cisco reported its adjusted gross margin — the portion of sales remaining after production and shipping costs — fell to 67.5% in the latest quarter, missing expectations due to rising memory prices affecting the supply chain. CEO Chuck Robbins told investors the company has raised prices and is renegotiating contract terms. Cisco also bumped up its fiscal 2026 revenue forecast and expects AI-related orders to exceed $5 billion. “Compressed margins definitely took some shine off the report,” said Jake Behan, Direxion’s head of capital markets. 2
In its earnings report, Cisco posted $15.3 billion in revenue for the quarter ending Jan. 24, marking a 10% increase. The company’s non-GAAP earnings—excluding items like acquisition costs—came in at $1.04 per share. Looking ahead, Cisco projects third-quarter revenue between $15.4 billion and $15.6 billion, with a non-GAAP gross margin range of 65.5% to 66.5%. AI infrastructure orders from hyperscalers, the major cloud operators, reached $2.1 billion this quarter. Cisco also bumped its quarterly dividend by 2% to $0.42 per share. CEO Robbins said the company is “uniquely positioned” to help customers “power the AI-era.” 3
Barclays analysts flagged a troubling mix issue hitting the margin line. “We did not expect memory to show this degree of weakness,” they noted, suggesting that weaker demand for optics and AI switches might be dragging results down. 4
Cisco’s earnings come on the heels of its push into data-center networking gear tailored for AI workloads. This week, the company revealed its Silicon One G300 chip and a router designed for massive data centers, targeting rivals Broadcom and Nvidia. Cisco executive Martin Lund claimed the new design can reroute data around network bottlenecks “within microseconds” and accelerate certain AI tasks. 5
Traders are watching to see if the margin hit is just a one-quarter blip or a longer-term issue. Cisco can move prices, sure, but it still needs customers on board—and it can’t let its product mix suffer as demand shifts toward newer AI hardware.
The downside is straightforward: memory prices stay high, customers resist higher rates, and gross margins fall more than anticipated despite revenue gains. That scenario would force the stock to rely heavily on AI optimism just as markets turn harsh on any sign of cost pressure.
