🖧 Cisco Systems ($CSCO) – Solid AI Orders, Tepid Reaction

Strong AI Infrastructure Growth Meets Wall Street’s Cold Shoulder

Hello traders and investors,

This weekend I’m breaking down Cisco Systems ($CSCO). It hit the headlines with earnings and posted record AI infrastructure orders, and still got dumped nearly 5% after a downgrade. That drop pushed it straight through its 50-day moving average, so it’s time to map out what’s really going on and how I’d approach it both short-term and long-term.

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What Just Happened

Cisco’s Q4 numbers looked solid on paper: EPS came in slightly ahead, revenue grew 7.6% year over year to $14.67 billion, and they gave upbeat Q1 guidance. More importantly, AI orders are ripping — $800 million in Q4 alone, with full-year AI orders topping $2 billion. That’s double their original target from last year.

So why did the stock tank?

Wall Street wasn’t impressed with the “modest” beat. HSBC even downgraded the stock to hold right after earnings, calling out Cisco’s muted EPS/revenue upside versus sky-high expectations. Their take was basically: “AI looks great, but the rest isn’t blowing us away.” In a market that punishes anything short of exceptional, CSCO got smacked nearly 5% on Friday, closing near the lows.

So the story is: solid quarter, record AI demand, but high expectations meant the stock still got hit.

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The Chart Breakdown

Here’s what I’m seeing:

• Candles & Price Action: Friday printed a wide red candle closing near the low at $66.20. That’s a heavy-volume breakdown day, not just a soft pullback.

• Moving Averages:

  • 10-day SMA: $69.49 → Price rejected hard under it. Short-term momentum gone.

  • 50-day SMA: $67.87 → Clean break below. This now flips into resistance.

  • 200-day SMA: $61.94 → Next major downside magnet if selling persists.

• Pattern: Failed breakout above $70, now rolling over with momentum confirming.

This is a failed breakout turned pullback. Until CSCO reclaims 67.9–69.5, short-term sellers have control.

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Indicators

• RSI (41): Neutral-to-weak. Not oversold yet, which means there’s room for more downside before dip-buyers feel compelled.

• MACD (curling lower): Rolling down and histogram shrinking. That’s momentum bleeding out. A bearish cross is possible if weakness continues.

• Stochastics (58/39 with bearish cross): Just crossed down, confirming near-term bearish momentum.

Indicators line up with the chart — short-term weakness, not washed out yet.

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Trade Setups and Summary

Trades Ideas That Make Sense, and My Take