Observed Signal · Feb 12, 2026 · Earnings Report · Source: CNBC Technology · Impact: 4/5 · Sentiment: Negative
Cisco Shares Plunge 12% Amid Rising Memory Costs
Cisco Systems shares plunged as much as 12% on Feb. 12, 2026 — its worst single-day decline since 2022 — after the company warned that rising global memory prices are pressuring margins. A surge in demand for AI chips, led by Nvidia, has tightened memory supply and driven up costs, limiting production capacity for other devices. Cisco reported better-than-expected quarterly results but issued a cautious forecast; product gross margin for the quarter was 66.4%, down 130 basis points year-over-year, which the company attributed to mix and higher memory costs. Cisco executives said they will raise prices, revise contracts and negotiate terms to address evolving component prices. The shortage and higher component costs have also affected other tech firms, including Apple, Dell and Qualcomm.
Earnings commentary from a major networking vendor about margin pressure driven by a global memory shortage (linked to AI chip demand) affects hardware costs, supply chains and financial guidance across the tech industry.
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Key Takeaways & Evidence Grounding
- Cisco shares fell as much as 12% on Feb. 12, 2026, marking the stock's worst day since 2022.
- Cisco reported product gross margin of 66.4% for the quarter, down 130 basis points year-over-year.
- Rising global memory prices, driven by strong AI chip demand from Nvidia, have increased component costs and limited production capacity.
- Cisco said it will raise prices, revise contracts and negotiate terms to mitigate higher memory costs after its earnings call.
- Qualcomm cited the memory shortage when issuing weak guidance on Feb. 4; Apple and Dell are also mentioned as affected by the shortage.
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Cisco shares surge 15% on AI orders; cuts ~4,000 jobs
Cisco reported stronger-than-expected Q3 fiscal 2026 results, sending shares up about 15% in after-hours trading. Adjusted EPS was $1.06 versus $1.04 expected and revenue was $15.84 billion versus $15.56 billion expected; revenue rose 12% year-over-year. The company said it has received $5.3 billion in AI infrastructure and hyperscaler orders so far this year and raised its expected fiscal-year AI orders to $9 billion (from $5 billion), with anticipated AI-market revenue of $4 billion (up from $3 billion). Cisco announced workforce reductions of fewer than 4,000 employees (under 5% of headcount) beginning May 14 and expects $1 billion in pre-tax restructuring charges, roughly $450 million of which will be recognized in fiscal Q4. Cisco also highlighted new networking switches and routers using next-generation silicon and reported a 25% increase in networking revenue.
Cisco stock drops despite earnings beat
Cisco reported fiscal Q4 results that beat expectations—adjusted EPS $1.22 vs $1.17 expected and revenue $17.25 billion (about an 18% year‑over‑year increase) vs $16.82 billion expected—and guided current‑quarter revenue to $18.0–$18.2 billion versus the $16.8 billion LSEG consensus. Hyperscalers placed roughly $4 billion of infrastructure orders in the quarter, bringing fiscal‑year hyperscaler orders to $9.3 billion; Cisco expects hyperscaler‑related revenue to rise to about $7.5 billion in fiscal 2027. Net income rose 51% year‑over‑year to $3.9 billion (97 cents a share). Despite the beat and above‑consensus guidance, shares fell about 9% on Aug. 13, 2026. Some analysts (Piper Sandler) called the guidance conservative while KeyBanc remained bullish; management described the period as a record quarter but urged prudence entering the new fiscal year.
Cisco Beats Estimates but Stock Plummets on Cautious Outlook
Cisco reported stronger-than-expected fiscal Q2 results with adjusted EPS of $1.04 (vs. $1.02 expected) and revenue of $15.35 billion (vs. $15.12 billion expected), driving about 10% year‑over‑year revenue growth. Net income rose to $3.18 billion ($0.80 per share) from $2.43 billion ($0.61) a year earlier. The stock fell roughly 7% in after-hours trading after Cisco issued current-period guidance of $1.02–$1.04 adjusted EPS and $15.4–$15.6 billion in revenue, which met analyst expectations. Cisco said it received $2.1 billion in AI infrastructure orders from hyperscalers, will supply products for a Saudi Arabia AI project alongside Advanced Micro Devices, and launched a networking switch containing an Nvidia chip. Management expects neocloud revenue ramps to become more pronounced in FY27.
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