AI Could Help Cisco Systems Beat Earnings Expectations for a Fifth Straight Quarter

The company helps firms scale network infrastructure, increase data capacity and adopt AI security

• Cisco is expected to report an earnings-per-share (EPS) of $0.91 on $14.06 billion in revenue for the quarter.
• Cisco has exceeded EPS and revenue estimates four quarters in a row.
• With strong earnings expected, more information on AI strategy will be a focal point for the earnings call.

Cisco Systems (CSCO) will report quarterly earnings after the market closes Wednesday. With such strong earnings history, exceeding earnings-per-share (EPS) and revenue estimates every quarter for the past year, the market is expecting another strong showing in a few days. Cisco is a direct beneficiary of the AI demand boom, as the tech company is known for AI security and networking tools.

Cisco is expected to report an earnings-per-share (EPS) of $0.91 on $14.06 billion in revenue for the quarter.

CSCO stock has had a decent 2025 so far, sitting around $61 per share after opening the year at $59.27. The stock took a nose-dive during the tariff turmoil like the rest of the market, hitting a low of $52.11 before rebounding to pre-tariff price levels.

In the last earnings call, Cisco CEO Chuck Robbins commented on his confidence for performance in AI security: “Cisco's strong quarterly results were driven by accelerating customer demand for our technology ... As AI becomes more pervasive, we are well-positioned to help our customers scale their network infrastructure, increase their data capacity requirements and adopt best-in-class AI security.”

Scott Herren, Cisco chief financial officer, echoed positivity while commenting on an increased dividend and share buyback program: “Q2 was another quarter of solid execution which drove revenue and EPS above our guidance ranges. Splunk continues to perform in line with our expectations on the top line, and was accretive to Q2 non-GAAP EPS, earlier than we had planned ... Our strong cash flows have led us to increase our annual dividend again this year, as well as our overall share repurchase authorization.”

There's nothing quite like an executive staff that bets on themselves with share buy-back programs, which could be a good sign of what the company expects of itself for the rest of the year and beyond. If executives get share buyback programs approved, they obviously believe the stock market will positively interpret what they're doing as they assume the stock price will rise.

Regardless, we always look at the options market for more context around the earnings call. Based on current implied volatility, CSCO stock is expected to have a +/- $2.76 stock price range for this week. With the notional value of the stock at $61 per share, this is less than 5% and makes this earnings call a low implied volatility event.

Looking to July, we can see this week's expected move makes up for well over 50% of the implied +/- $3.89 range over the next 67 days. While general implied volatility is low in CSCO stock, this announcement still makes up for a big chunk of implied volatility for the next few months.

Bullish on Cisco stock for earnings

If you're bullish in CSCO stock for earnings, you're looking for another strong quarter with a bullish sentiment for the rest of the year. If the tech company can maintain strong guidance even through tariff uncertainty, we could see the stock price benefit on Wednesday after the close.

Bearish on Cisco stock for earnings

If you're bearish on CSCO stock for earnings, you may think this recent broad market rally is masking the true uncertainty that still looms for a lot of these AI-based tech stocks. If there is an EPS or revenue miss, or weakened guidance for the rest of the year, we could see the stock price sell off after the announcement on Wednesday afternoon.

Tune in to Options Trading Concepts Live at 11 a.m. CDT on Wednesday for a look at options trading strategies ahead of Cisco Systems' announcement.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb  

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