New York, Feb 15, 2026, 10:59 EST — Market is done for the day.
- Cisco bounced back 2.5% on Friday, clawing back some ground after Thursday’s steep post-earnings drop.
- Strong AI demand is on one side of the scale. On the other, investors are eyeing profitability concerns as memory costs climb.
- U.S. markets are closed Monday for Presidents Day. Trading picks back up on Tuesday.
Cisco Systems (CSCO.O) finished Friday’s session 2.5% higher at $76.85, recovering a slice of the ground lost after Thursday’s drop of over 10% when worries about profitability took center stage.
Cisco’s rebound has turned into a benchmark for enterprise and cloud networking demand linked to artificial intelligence buildouts. But there’s another piece: cost inflation. Investors want to know how much of that AI boost actually flows through to earnings.
U.S. markets are closed Monday for Presidents Day, so Tuesday brings the next round, and with a shortened trading week, expect thinner liquidity—moves can get amplified.
Cisco turned in a quarterly revenue figure of $15.3 billion for the period ending Jan. 24, underscoring some solid demand. Orders for AI infrastructure from hyperscalers came in at $2.1 billion. The company bumped its full-year revenue outlook higher and increased its quarterly dividend to $0.42 per share. Guidance for the current quarter calls for a slimmer gross margin.
The market took notice when Cisco’s adjusted gross margin landed at 67.5%, missing the 68.14% analysts had expected. Higher memory prices, the company said, were a major factor.
Cisco has bumped up prices and is tweaking contract terms with partners and customers, CEO Chuck Robbins told analysts on the earnings call. The company is also betting on more upside from AI networking, with Robbins saying, “we now expect to take AI orders in excess of $5 billion.” Reuters
“Compressed margins definitely took some shine off the report,” said Jake Behan, head of capital markets at Direxion. For him, the big question now is how quickly Cisco can convert its backlog into revenue going into the second half. Reuters
Peers are having their say on the tape as well. Arista Networks stands out, its margin outlook viewed as more stable—investors are quick to note the contrast in the AI networking space. The thinking is that certain vendors, like Arista, can handle memory cost pressures more effectively than rivals.
The risk scenario? Simple enough—memory prices remain elevated, Cisco struggles to pass on costs, and margins take another hit. That AI premium on the stock? It could shrink fast. And if the broader economic backdrop sours, big network upgrades could get pushed back by customers, making matters worse.
Rates are shaking things up these days. U.S. consumer prices turned in a smaller January gain than forecasts had called for, which has traders still betting on Fed rate cuts before the year is out and pushed yields down. Moves like that can spark a rapid rally in big tech and related stocks.
As soon as markets swing back into action, there’s a packed schedule. On Tuesday morning, U.S. retail sales hit, and then the Fed drops its Jan. 27-28 meeting minutes Wednesday at 2 p.m. ET. Both releases have the potential to shake up yields, affecting the discount rates traders use for growth and “AI infrastructure” stocks. Scotiabank
Cisco’s next session kicks off Tuesday. Traders have their eyes on whether that Friday rebound sticks, and if the stock can find its footing as a bigger question looms: can Cisco protect its profits as demand for AI networking hardware surges.
