Cisco’s Stock (CSCO) Recovers Lost Ground Ahead of Earnings – What To Expect

Cisco's stock price (NASDAQ: CSCO) has battled back alongside broader markets from the tariff induced sell-off, with a rally of more than 16% off April lows putting the stock in the high $61 range, right back where it started that fateful month.

The stock has managed to outperform broader markets over the past 12 months, with a 26.21% gain more than double that of the S&P 500 (+12.2%) over the same period. Now, with Cisco Systems' fiscal third-quarter earnings report scheduled after today's market close, we take a look at the view from the street for expectations, and what may come next.

Analysts project earnings of $0.91 per share (up 3.4% year-over-year) on revenue of $14.05 billion (a 10.6% increase YoY, from Q3 2024). These figures reflect improved demand for networking infrastructure, particularly in AI-driven data centers and cloud environments.

Historically, Cisco shares have risen 60% of the time post-earnings, with a median one-day gain of 4.2%.

Notably, the company has surpassed EPS estimates in four consecutive quarters, including a +3.4% surprise in the most recent period. This track record will have markets looking for more of the same, with anything less than a beat likely to weigh on upward momentum. Management’s commentary on supply chain adjustments (e.g., tariffs) and AI adoption timelines will be critical for sustaining post-earnings sentiment.

Cisco’s board authorised a $15 billion share repurchase program in February 2025, supplementing an existing $17 billion authorisation. Combined with a 3% dividend hike (to $0.41 per share), these moves signal confidence in long-term cash flow stability.

The repurchases could provide a floor for the stock, which trades at a forward P/E of 16.16, below the sector median of 27.09. However, investors may question whether capital allocation prioritises growth investments adequately, given the competitive AI landscape.

Analysts have an average price target on Cisco's stock at $67.29, reflecting a perceived upside of ~10% from the current price level. With the 52 week high at $66.50, there may be shifts from the street as results are digested, with earnings season a key time for reassessment.

Operational Agility

Although tariff concerns are now easing in markets, Cisco had made provisions of their own in recent periods. The company reduced its exposure to Chinese-manufactured goods by 80% through supply chain diversification, including expanding production in India and Mexico. This agility has cushioned the impact of 25% tariffs on steel and aluminum imports, enabling Cisco to maintain stable gross margins (~66%) despite macroeconomic headwinds.

CFO Scott Herren also emphasised that tariff-related cost increases are “negligible,” with FY2025 EPS guidance raised to $3.68–3.74 (from $3.60–3.66). This operational resilience underscores Cisco’s ability to navigate geopolitical uncertainties while meeting robust demand for networking hardware.

Operationally, the company has also been making moves to expand on key segments.

At the recent RSA Conference 2025, Cisco unveiled AI security innovations, including XDR, and a ServiceNow SecOps partnership.

These advancements address a critical market need. Cisco’s 2025 Cybersecurity Readiness Index reveals that 86% of enterprises experienced AI-related security incidents in the past year. By positioning itself as a leader in securing AI infrastructure, Cisco taps into a growing market projected to exceed $100 billion by 2030.

Today's results could well prove pivotal to dictating the next leg for CSCO.