Should You Buy, Sell, or Hold Cisco Stock Before Q1 Earnings?

Cisco Systems CSCO is set to release its first-quarter fiscal 2026 results on Nov. 12.The company anticipates first-quarter fiscal 2026 revenues between $14.65 billion and $14.85 billion. Non-GAAP earnings are expected between 97 and 99 cents per share. The Zacks Consensus Estimate for revenues is pegged at $14.78 billion, indicating growth of 6.78% from the year-ago quarter’s reported figure. The consensus mark for earnings has been steady at 98 cents per share over the past 30 days, suggesting year-over-year growth of 7.69%.Consensus Estimate Trend Image Source: Zacks Investment Research CSCO’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 3.86%.  Cisco Systems, Inc. Price and EPS Surprise Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote Let’s see how things are shaping up prior to this announcement.Key Factors to Note for CSCO’s Q1 EarningsCisco’s first-quarter fiscal 2026 results are expected to have benefited from improved demand for networking products driven by switching, enterprise routing, webscale infrastructure, and industrial IoT and servers. Cisco’s new smart switches are powered by Silicon One and deliver enhanced performance, which is expected to have driven order growth in the to-be-reported quarter. Cisco Nexus switch integration with NVIDIA’s Spectrum-X architecture offers low latency and high-speed networking for AI clusters, which is expected to have aided demand. The Zacks Consensus Estimate for fiscal first-quarter Networking revenues is currently pegged at $7.34 billion, indicating 8.6% year-over-year growth. However, this estimated growth rate is slower than the 12% CSCO reported in the fiscal fourth quarter.Cisco’s strategy of infusing AI across Security platforms and developing Agentic capabilities across the portfolio has been a key catalyst. The Splunk acquisition has been contributing to top-line growth along with strong demand for Secure Access, XDR, Hypershield and AI Defense solutions. The Zacks Consensus Estimate for fiscal first-quarter Security revenues is currently pegged at $2.24 billion, indicating 11% year-over-year growth.Observability is expected to have benefited from the strong demand for Splunk and ThousandEyes. The consensus mark for observability revenues is currently pegged at $288 million, suggesting 11.6% growth over the figure reported in the year-ago quarter.CSCO Shares Lag Sector Image Source: Zacks Investment Research Cisco shares have appreciated 20.1% year to date (YTD), underperforming the Zacks Computer & Technology sector and competitors like Dell Technologies DELL and Arista Networks ANET. However, CSCO shares have outperformed Hewlett-Packard Enterprise HPE, YTD. Shares of Dell Technologies, Arista Networks and Hewlett-Packard have appreciated 27.3%, 21.8% and 9.8%, respectively. The broader sector has risen 24.3%, YTD.CSCO Stock’s PerformanceHowever, Cisco stock is not so cheap, as the Value Score of C suggests a stretched valuation at this moment.In terms of the forward 12-month price/sales, CSCO is trading at 4.65X, higher than the Zacks Computer Networking industry’s 4.24X, Dell Technologies’ 0.87X, and Hewlett Packard Enterprise’s 0.76X.CSCO’s Valuation Image Source: Zacks Investment Research Cisco Rides on Strong Portfolio Amid Stiff CompetitionCisco’s aggressive AI push and growing security dominance have been major growth drivers. AI Infrastructure orders from webscale customers hit $2 billion in fiscal 2025, double the management’s original expectation. The company’s aggressive AI push and growing security footprint boost prospects. Rapid acceleration in the capacity requirements of the network due to unprecedented levels of network traffic and an ever-evolving threat landscape bodes well for Cisco’s prospects. The AI opportunity further gets a boost from CSCO’s partnership with NVIDIA.Introduction of new agentic capabilities in Cisco AI Assistant, RoomOS 26 for Cisco Devices, and purpose-built integrations across Cisco devices and the Webex Suite have been noteworthy innovations. Cisco announced enhancements to the Webex Customer Experience portfolio, including a new AI-powered tool for supervisors. Expected to be available in early 2026, the enhancements will unify quality management across the contact center. The company is also expanding the Webex ecosystem in India and the Kingdom of Saudi Arabia.Cisco has introduced the Cisco 8223, the industry's most optimized routing system for efficiently and securely connecting data centers and powering the next generation of AI workloads. The company also announced the P200 chip, which powers 8223.However, Cisco is suffering from stiff competition from the likes of Arista Networks, Dell Technologies, Broadcom and Hewlett Packard Enterprise across AI networking and enterprise security.ConclusionCisco’s near-term results are expected to benefit from an improving networking business and growing security business, along with a rich partner base. However, slowing momentum in networking revenues, a challenging macroeconomic environment, stiff competition and stretched valuation are major concerns. Cisco currently carries a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Dell Technologies Inc. (DELL): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks