Cisco Systems (CSCO) shares surged after the company exceeded fiscal second quarter expectations on both the top and bottom lines. Morningstar senior equity analyst William Kerwin joins Market Domination Overtime to provide insight into Cisco’s performance.
"The numbers were quite good," Kerwin says. "They beat our expectations for the quarter, and the third quarter guidance was pretty positive — more in line with what we were modeling, which was a little bit above the Street."
"The full-year guidance was better than we expected, which shows a pretty good Q4 implied after that Q3," he adds. "To put this in context, we think this is just continued good growth momentum for Cisco after a few years of some choppy demand … we think this is better reflecting a healthy demand environment now."
Kerwin also notes that while artificial intelligence (AI) will contribute to Cisco’s growth, it isn’t the primary driver: "We look to a networking peer like Arista Networks (ANET) as a much better way to play into that AI networking trend."
Cisco’s results reflect solid demand for its infrastructure products, and Kerwin emphasizes that its business is not highly impacted by fluctuating corporate spending. Despite potential tariff risks, he believes Cisco’s execution will mitigate any significant impacts.
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