Cisco Q2 Revenue Climbs 10% but Gross Margin Drop Pressures Shares
Cisco reported fiscal Q2 revenue of $15.3 billion, up 10% year over year, with non-GAAP EPS of $1.04 and 21% growth in networking revenue. Shares slipped after gross margin declined to 67.5% year-over-year, even as a Bank of America note raised its price target to $95, boosting upside to 24%.
1. Q2 Earnings Highlights
Cisco delivered fiscal Q2 (ended Jan. 24) revenue of $15.3 billion, up 10% year over year, non-GAAP EPS of $1.04, networking revenue of $8.29 billion (up 21%) and remaining performance obligations of $43.4 billion (up 5%).
2. Gross Margin Weakness
Adjusted gross margin fell to 67.5%, down 1.2 percentage points year over year, triggering roughly a 7% drop in after-hours trading as investors fretted over rising hardware costs tied to AI deployments.
3. BofA Raises Price Target
Bank of America boosted its price target to $95, implying 24% upside, citing conservative Q3 guidance at about 9.5% revenue growth versus peers’ 7.3% expectation and a modest 1.4% quarter-over-quarter gain in Q4 despite typical seasonality, hinting at hidden upside.