On Tuesday, Cisco Systems Inc. (CSCO) shares are up 0.88% to $45.01. Investors and traders will also observe the company's fourth-quarter revenue report, scheduled for this Wednesday after hours.
As it focuses on high-growth sectors like cybersecurity and artificial intelligence, Cisco intends to ax thousands of workers in a second round of layoffs this year, matching or surpassing the 4,000 positions eliminated in February, according to Reuters.
CSCO Stock Forecast: Earnings Projection
The company's coming fourth-quarter results are anticipated to include the announcement. Cisco is expanding through deals and expenditures in artificial intelligence (AI) to respond to difficulties in its core business.
On August 14, Cisco Systems, Inc. (CSCO) will announce its fiscal 2024 fourth-quarter results. The business projects revenues for the fourth quarter of its fiscal year 2024 to range from $13.4 billion to $13.6 billion. Non-GAAP revenue per share is anticipated to be between 84 and 86 cents.
Cisco Competitive Pressure
Due to fierce competition and inadequate demand from cable and telecommunications companies, Cisco has been experiencing slow networking sales. Overstock with clients has hindered growth in the last few months.
Cisco reported $12.7 billion in earnings for the third period of fiscal 2024, a 12.8% year-over-year decrease. This decline was mostly caused by an 18.6% drop in product earnings, which comprised 71% of the company's overall revenue. Except for Splunk (which was acquired on March 18, 2024), order volumes for goods remained constant from year to year, indicating weak demand.
The fierce rivalry in the AI-driven networking market, which is made worse by Hewlett Packard's HPE acquisition of Juniper for approximately $14 billion, poses a further threat to Cisco's prospects.
CSCO Bull Case
The estimated $1.02 billion agreement mark for cooperation revenues points to a modest year-over-year decrease.
On the other hand, Cisco is profiting from robust security growth due to strong customer demand for suites of products like XDR, Secure Access, and Multi Cloud Defense.
Splunk and Isovalent are two acquisitions that have strengthened the portfolio. Splunk's addition strengthens CSCO's recurring revenue stream. In the fiscal third period, annual recurring earnings increased by 22% to $29.2 billion. In the quarter that will be reported, the trend is anticipated to have persisted.
CSCO Stock to Benefit From Innovative Portfolio
Cisco has powerful long-term chances due to its innovative portfolio and the rise in AI workload. With over $1 billion in orders pending for the fiscal year 2025, CSCO currently has over $800 million in AI orders from hyperscalers.
Cisco's available market in the infrastructure space is currently estimated to be $221 billion. The increasing use of cloud and AI, in conjunction with businesses' continuing digital transformation, has benefited CSCO.
Initiatives to expand the security portfolio are anticipated to spur growth. To improve its security architecture in the age of artificial intelligence, Cisco has released new features for its Security Cloud. With $118 billion in addressable markets, the Splunk acquisition should further enhance CSCO's prospects in this space.
Furthermore, Cisco's growing network of partners, which includes companies like Microsoft, NVIDIA NVDA, Lenovo, and AT&T T, should be considered.
The Cisco Nexus HyperFabric AI cluster solution, an innovative end-to-end infrastructure made to scale generative AI workloads effectively, has been introduced by the Cisco-NVIDIA partnership. To provide businesses with a smooth digital purchasing experience, Cisco and AT&T are working together to offer 5G Fixed Wireless Access via the Meraki MG52 and MG52E interfaces.
Cisco Stock Price Prediction Technical Analysis
In the daily chart of CSCO stock price, the recent price showed a continued bearish pressure, while the 100 day Simple Moving Average is above the current price.
In the broader context, the high volume level since September 2023 is above the current Cisco stock price, suggesting a confluence of selling pressure. In that case, a bearish continuation is highly possible until a bullish exhaustion appears from the bottom.
Based on this outlook, an upward correction is possible if a daily candle closes above the 46.26 high. In that case, the bullish continuation might take the price towards the 48.75 resistance level. Moreover, a stable market reversal might be seen after overcoming the 48.35 high volume level with a daily close.
On the other hand, a failure to hold the price above the high volume line with a bearish rejection from the dynamic 100-day SMA could be a trend trading opportunity, aiming for the 40.00 psychological level.
