Cisco Systems shares have fallen into a bear market, tumbling roughly 20% from their 2025 peak as investors lock in gains following a powerful rally. The networking equipment maker's stock touched $105, its weakest level since mid-May, cutting its market capitalization from $513 billion to about $414 billion — a decline of nearly $100 billion in value.
The pullback comes even after Cisco delivered a strong quarterly report on August 12. Revenue climbed 18% year over year to $17.3 billion, powered by demand from hyperscale cloud providers. Management also disclosed that AI infrastructure orders reached $4 billion in the quarter, lifting the annual total to $9.3 billion. The company projects AI infrastructure revenue of $7.5 billion this year.
AI spending remains the core growth engine
The broader AI capital expenditure cycle continues to expand. JPMorgan's Jamie Dimon said this week that hyperscaler AI spending could exceed $1 trillion next year, up from roughly $750 billion in 2025. Cisco is not relying solely on hyperscalers; it is also seeing solid demand from neocloud providers, sovereign customers, and large enterprises. That mix prompted management to raise forward guidance, with current-quarter revenue projected at $18 billion to $18.2 billion.
Analyst consensus points to annual revenue growth of 15.5% this year, followed by approximately $78 billion next year. While that pace is healthy, it trails the momentum seen at other IT hardware names such as Micron and SanDisk, which have benefited from more dramatic pricing swings in memory and storage.
Valuation and analyst sentiment
On valuation, Cisco trades at a forward price-to-earnings ratio of about 21. That sits below the sector median of 23 but slightly above the S&P 500 average of 20, suggesting the stock is neither cheap nor expensive relative to peers. According to data compiled by Kyro, most analysts remain constructive: 16 rate the shares a buy, while 6 have a hold rating. The average price target of $119 implies roughly 12% upside from current levels. Bullish calls have come from Deutsche Bank, UBS, Truist, and Barclays.
Technical picture stays bearish for now
The daily chart shows CSCO sliding from a June high of $130.40 to $105. The stock has broken below its 50-day moving average and fallen under the lower boundary of a descending trendline connecting the lows since May 14. That setup keeps the short-term outlook bearish, with $100 as the next level to watch. Over a longer horizon, the shares could recover and retest the all-time high near $130 if AI infrastructure demand holds up.
For investors weighing whether to buy the dip, the key question is whether the current retreat reflects profit-taking after a record run or a genuine shift in the growth story. So far, the fundamental data — rising AI orders, upbeat guidance, and a stable valuation — do not point to a deterioration in the business. The stock's direction from here will likely depend on whether hyperscaler spending stays on its current trajectory and whether Cisco can convert its AI pipeline into sustained revenue growth.
This article is for informational purposes only and does not constitute financial advice.
