Cisco Systems Inc

VyOS Networks announced that Spicer Group, a US-based engineering and professional services firm, has replaced its Cisco-based networking stack with VyOS to modernize branch networking across its distributed operations. Spicer Group, which employs 380 people across 16 offices, now runs VyOS on bare-metal x86 white-box hardware to support routing across 13 branch sites connected via EPLAN circuits. The migration, led by Network Administrator Michael Doan, who had prior experience with VyOS, was driven by rising Cisco licensing costs, limited flexibility for Linux-style scripting, and vendor lock-in. The deployment uses OSPF dynamic routing and a CLI-first model with full Linux access, and has scaled to 13 sites without architectural redesign. Spicer Group is now evaluating VyOS 1.5 and Vector Packet Processing for higher throughput and future cloud deployments, with an upgrade to VyOS 1.5 planned.

Cisco Systems reported fiscal fourth-quarter earnings and revenue that beat Wall Street estimates and issued guidance well above expectations, yet shares fell as much as 8.4% the following trading day. Revenue grew 18% year over year to $17.25 billion, beating the $16.82 billion analysts expected, and net income jumped 51% to $3.9 billion. Hyperscalers placed $4 billion in AI infrastructure orders during the quarter, bringing the fiscal year total to $9.3 billion, and Cisco expects that figure to reach $7.5 billion in fiscal 2027. The company guided fiscal 2027 revenue to $72.2 billion to $73.4 billion, well above the $68.69 billion analysts modeled, but its gross margin guidance of 65% to 66% for the current quarter is slightly below the 66.3% just reported. Arista Networks posted its first-ever $3 billion revenue quarter on August 4, 2026, with second-quarter revenue of $3.036 billion, up 37.7% year over year, and guided third-quarter revenue to about $3.3 billion.

Hedge funds and mutual funds took sharply different approaches to individual AI stocks during the second quarter, according to Goldman Sachs. Hedge funds bought Microsoft and Amazon while mutual funds reduced positions in both, and hedge funds cut exposure to Alphabet, Meta Platforms, Nvidia, Broadcom, Lam Research, Marvell Technology, Cisco Systems, Hewlett Packard Enterprise and Applied Materials. Mutual funds bought Advanced Micro Devices, Micron Technology and Sandisk while hedge funds reduced exposure to those stocks. Goldman identified 12 AI infrastructure stocks purchased by both groups, including American Electric Power, Bloom Energy, CoreWeave, Flex, NiSource, Seagate Technology, Talen Energy and Xcel Energy. The analysis covers 991 hedge funds with $5.4 trillion of gross equity positions and 504 large-cap active mutual funds with $4.6 trillion in equity assets.

Cisco Systems shares dropped 10% after reporting fourth-quarter fiscal 2026 results on Aug. 12, as investor concerns about margin pressure and forward growth quality outweighed strong top-line results. Revenues increased 18% year over year to $17.3 billion, product orders jumped 35%, and non-GAAP earnings rose 23% to $1.22 per share, but non-GAAP gross margin fell 210 basis points to 66.3% and product gross margin declined 270 basis points to 64.8% due to a higher hardware mix and rising memory costs. Cisco expects first-quarter fiscal 2027 gross margin in the 65-66% range and acknowledged that rapid growth of hardware-heavy AI and networking businesses will likely remain a gross-margin headwind through fiscal 2027, while annual recurring revenues grew only 3% and services revenue was essentially flat. Hyperscaler AI infrastructure orders reached $9.3 billion in fiscal 2026, roughly 4.5 times fiscal 2025, and Cisco expects hyperscaler AI revenue to rise from about $4 billion in fiscal 2026 to $7.5 billion in fiscal 2027, with a more than $100 billion networking refresh opportunity ahead. The Zacks Consensus Estimate for fiscal 2027 earnings is $4.89 per share, up 2.3% over the past 30 days, and Cisco currently carries a Zacks Rank #3 (Hold).

Cisco's second quarter exceeded Wall Street expectations with revenue of $17.25 billion and adjusted EPS of $1.22, but the stock fell after the report. Management attributed the strong results to surging demand for AI-driven networking infrastructure, with CEO Charles Robbins saying the company is only at the beginning of a networking super cycle. Analysts pressed executives on growth durability excluding AI, margin pressures from hardware mix, security growth driven by Splunk, revenue deceleration after Q3, and the impact of price increases on AI orders. CFO Mark Patterson described guidance as prudent, citing tougher comparisons and mix shift toward hardware, while emphasizing high profitability of incremental AI business. Cisco currently trades at $111.43, down from $123.88 before earnings.

Cisco Systems is among more than 2,500 organizations reportedly affected by a major AI supply chain incident linked to LiteLLM in March 2026. The exposure is said to include sensitive data such as cloud credentials and AI API keys tied to AI integrations. The incident raises questions about cybersecurity, operational resilience and data privacy across Cisco's AI powered infrastructure and services. Investors are assessing how these AI related risks may influence perceptions of Cisco's security posture and its role in enterprise AI adoption. Cisco just reported Q4 2026 revenue of US$17,252m and net income of US$3,859m, with full year revenue of US$63,325m and net income of US$13,267m, plus continued buybacks of 13,000,000 shares and a US$0.42 dividend declaration.

Nine of the ten notable S&P 500 companies reporting earnings this week topped consensus EPS estimates, with nine also posting year-over-year earnings growth. Revenue momentum held firm as eight companies beat Wall Street expectations and all ten achieved year-over-year top-line expansion. Among the standouts, Super Micro Computer surged 19.02% after guiding first-quarter revenue to $14.5 billion to $15.5 billion, while Lumentum Holdings jumped 13.6% on a 109% revenue increase to $1.01 billion. Tapestry slipped 16.49% despite a fiscal fourth-quarter beat and in-line fiscal 2027 outlook, and Cisco Systems dropped 8.40% even as product orders rose 35% year over year.

US stocks rallied on Thursday after a favorable producer price report eased inflation concerns and reduced expectations for a Federal Reserve rate hike in September. The S&P 500 rose 0.65%, the Dow Jones Industrial Average added 0.13%, and the Nasdaq 100 gained 1.15%. The July final-demand PPI was unchanged month-over-month and up 4.7% year-over-year, below market expectations, while core PPI rose 0.2% month-over-month, also weaker than forecast. However, US tech stocks were undercut by an -8% drop in Cisco Systems after disappointing guidance and a more than -12% decline in Cerebras Systems (CBRS) due to a decline in sales at its hardware business. Crude oil prices fell more than 2% amid no new military strikes in the Persian Gulf, and the 10-year Treasury yield dropped 4.4 basis points to 4.639%.

Cerebras Systems slumped over 18% premarket on Thursday after it missed key estimates despite soaring cloud revenue, raising doubts about the ability of its AI chips to challenge Nvidia. The Sunnyvale, California-based company's cloud business roughly quadrupled to $126 million versus the year-ago quarter, but its hardware sales, including AI chips, declined to $54.1 million from $70.3 million a year ago. Second-quarter adjusted gross margin fell to 40.6% from 46.5% in the prior quarter, while revenue missed analysts' estimates despite a higher annual outlook. Citi and Mizuho cut their price targets slightly, and the median target as per estimates compiled by LSEG implied an upside of 15% from the previous close. Separately, shares of Cisco Systems fell over 6% as its outlook fell short of lofty expectations tied to its rise as a beneficiary of the AI data center buildout, with Cisco expecting $7.5 billion in revenue from AI infrastructure orders from hyperscalers in fiscal 2027.

Europe is facing its fifth heatwave of this summer, expected to peak on Thursday, August 13, amid extreme weather that is straining public health systems and energy networks across the region, while the United Kingdom is on track for its hottest summer on record. The scorching conditions are driven by successive high-pressure systems, or heat domes, blanketing the region, and are also disrupting freight transport on some major rivers. In financial markets, global stocks climbed near record highs after US inflation data came in cooler than expected, easing concerns that the Federal Reserve would raise interest rates in the near term. The yen strengthened after the Japanese government signaled support for the Bank of Japan to raise rates sooner, with the next hike possibly coming in September or October. West Texas Intermediate crude traded around 83 dollars a barrel, snapping a six-day winning streak. On the geopolitical front, the administration of President Donald Trump is stepping up economic pressure on Iran, including successive rounds of additional economic sanctions and maritime interdiction measures aimed at curbing Iranian oil exports. The UK government is planning legislation to regulate the use of AI in gene synthesis, amid concerns that the absence of global oversight could allow malicious actors to use the technology to create synthetic DNA that might lead to the development of biological weapons. In tech stocks, Lenovo surged as much as 22 percent in Hong Kong to a record high after reporting quarterly revenue up 43 percent, beating market expectations on AI-related demand. In contrast, Cerebras fell in after-hours trading after hardware revenue declined, while Cisco slipped as analysts viewed the company's AI sales outlook as highly cautious. Another focus is US-Japan cooperation on developing rare earth deposits beneath the seabed near Minamitorishima Island, more than 1,000 miles southeast of Tokyo, with estimates suggesting the resources could meet industrial demand for centuries and help both countries build a complete rare earth supply chain, reducing reliance on China for strategically important minerals.

Several companies saw notable after-hours stock moves following their latest earnings reports. Cerebras Systems tumbled 14% after second-quarter revenue of $180 million missed the $194 million LSEG consensus estimate. StubHub lost more than 15% as adjusted gross margin of 82.2% fell short of the 84.3% StreetAccount consensus, though it reaffirmed its full-year adjusted EBITDA outlook. Jack in the Box gained more than 1% after fiscal third-quarter earnings of 96 cents per share beat the 88-cent FactSet estimate, while Red Robin Gourmet Burgers rose nearly 2% on better-than-expected second-quarter results. Coherent slipped almost 3% despite first-quarter guidance above expectations, and Cisco Systems fell 3% after adjusted gross margin only narrowly beat estimates.

CloudSEK has identified more than 2,500 organisations that may have been potentially affected by a major AI supply chain incident involving LiteLLM in March 2026, with approximately 434,000 automated software-development pipelines linked to the exposure. The potentially affected organisations span critical industries including technology, cybersecurity, banking and financial services, telecommunications, manufacturing, consulting, logistics, and enterprise software, with high-confidence matches associated with major global organisations including NVIDIA, Samsung Electronics, Cisco Systems, Siemens, S&P Global, ServiceNow, Deloitte, Vodafone, X Corp, Zscaler, FedEx, Volkswagen, Thales and London Stock Exchange Group. The incident occurred after cybercriminal group Team PCP compromised LiteLLM, and malicious versions were reportedly available through the Python software repository PyPI for only around 40 minutes, yet CloudSEK's analysis identified approximately 434,000 CI/CD pipelines potentially connected to the exposure. Potentially accessible information included cloud credentials, source-code access, server keys, software-development secrets, AI API keys and other credentials that could give attackers access to critical business systems, and CloudSEK stresses that appearing in the dataset does not automatically mean an organisation was successfully breached but should be investigated urgently. CloudSEK has released a free exposure-checking tool to help organisations determine whether credentials or infrastructure associated with them appear in the identified dataset.