should you buy cisco stock on post earnings weakness

Cisco CEO remains ‘as bullish as ever,’ but stock continues to fall

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Written on Nov 14, 2024
Reading time 3 minutes
  • Cisco Systems Inc reports its fourth straight quarter of revenue decline.
  • CEO Chuck Robbins still remains bullish on what the future holds for CSCO.
  • Jim Cramer recommends owning Cisco stock on post-earnings weakness.

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Famed investor Jim Cramer says insider confidence is reason enough to load up on Cisco Systems Inc (NASDAQ: CSCO) on the post-earnings weakness.

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Cisco stock is down 2% at writing after reporting its fourth straight quarter of revenue decline.

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Nonetheless, the communications technology company came in ahead of Street estimates for its first financial quarter last night.

Shares of Cisco Systems Inc. are up more than 30% versus their year-to-date low in early August.

Cisco CEO remains incredibly bullish

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Jim Cramer took a positive tone as he discussed Cisco’s quarterly release on CNBC today.

He favors owning this networking hardware firm as “I’m not sure I have ever seen Chuck Robbins (chief executive) be as bullish as he was” during the interview on Mad Money last night.

CEO Robbins expects continued strength in the global economy (including Europe) to translate to more business for Cisco Systems.

The Nasdaq-listed firm already has a deal with Meta Platforms and expects to win “a lot more” business from hyperscalers moving forward.

Cisco shares currently pay a dividend yield of 2.76%, which makes up for another great reason to remain invested in them.

CSCO is a prominent AI beneficiary

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Jim Cramer remains constructive on Cisco stock also because it’s a notable AI beneficiary.

Cisco secured over $300 million worth of orders for artificial intelligence infrastructure from large-scale clients in its recently concluded quarter and remains confident that “we’ll exceed our target of $1 billion of AI orders this fiscal year from web-scale customers.”

The California-based company has already rolled out products with Nvidia chips and “over time, you’ll see us support other GPUs as the market demand.”

CEO Chuck Robbins expects a strong 2025 on the back of “enterprise real deployment of some of these technologies.” He raised the full-year guidance last night to $3.60 a share to $3.66 a share of earnings on up to $56.3 billion in revenue.

JPMorgan sees upside in Cisco stock to $66

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Analysts at JPMorgan Chase seem to agree with the Mad Money host.

Earlier this week, the investment firm upgraded CSCO to “overweight” citing strong enterprise networking demand.

Industry forecasts remain firm for a strong rebound of +5% growth in aggregate across WLAN as well as DC and Campus Switch markets in 2025 following a double-digit percentage decline in 2024.

JPM agreed that quarterly updates in the near term could remain choppy through the early stages of recovery but recommended owning Cisco stock for the medium-term opportunity. The investment firm sees an upside in shares of this multinational to $66 which translates to about a 14% upside from here.

Note that the AI-enabled hardware and software market is expected to grow at an annual rate of 40% at least to hit a $780 billion valuation by the end of 2027.

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