Cisco Systems (CSCO) shares are inching lower ahead of the AI infrastructure giant’s Q4 earnings scheduled to be released after the market closes on August 11.
Consensus is for CSCO to record $1.17 a share of earnings (EPS) for its fourth quarter on $16.85 billion in revenue, representing mid-to-high teen gains in both the top and the bottom line.
The quarterly print arrives at a time when Cisco stock is already hovering a little under its year-to-date high of $130.
Options data says Cisco stock will rally after Q4 print
Despite massive year-to-date gains, the derivatives market believes CSCO shares will push higher and print a new YTD high after the Q4 print late on Wednesday.
According to Barchart, the put-to-call ratio on options contracts expiring August 14th sits at 0.6 at writing. A reading below 1 is often interpreted as signaling a bullish skew.
The upper price on those contracts is set at nearly $130 currently, indicating Cisco Systems could soar as much as 6.6% within days after its financial release.
Investors should also note that the options traders’ optimism is mirrored in the technical setup as well.
CSCO is currently trading firmly above its key moving averages (MAs) – with an RSI in the late 50s indicating intense buying pressure.
What CSCO shares need to rip higher from here
To convert bullish options bets into a sustained rally, Cisco must demonstrate that its massive AI order pipeline is rapidly converting into recognized top-line revenue.
Investors are no longer content with cumulative booking metrics alone; market watchers want proof that Silicon One switching architectures and Acacia optical interconnect deployments are expanding rapidly within tier-one hyperscalers.
Furthermore, industry experts emphasize that a strong post-earnings surge in Cisco shares requires validation beyond hyperscaler capital expenditure.
CSCO needs to show accelerating enterprise traction across its sovereign AI pipeline while proving that its multi-billion-dollar “Catalyst 9000” campus refresh cycle is picking up speed as legacy hardware reaches end-of-support deadlines.
How Wall Street recommends playing Cisco Systems
While demand tailwinds remain robust, CSCO stock faces near-term profitability friction that could temper market enthusiasm.
Higher memory chip prices and a shifting product mix toward high-volume hardware carry tighter margin profiles compared to software subscriptions, keeping gross margins under scrutiny.
Additionally, Splunk’s ongoing business model transition from legacy on-premise licensing to cloud-native subscriptions creates short-term revenue recognition lag.
If management provides confident forward guidance that reassures Wall Street on gross margin expansion and software recurring revenue trajectory, Cisco stands well-positioned to maintain its multi-month momentum and justify its expanding valuation multiples.
Heading into the quarterly release, Wall Street rates Cisco Systems Inc at Moderate Buy, with price targets going as high as $150, indicating potential upside of roughly 25% from current levels.
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