Cisco(CSCO.US) drops more than 6% before the market open; third-quarter gross margin expected to be weak

K-LinePoet · 2026-03-01T11:45:33+00:00

Cisco(CSCO.US) drops more than 6% before Thursday's market open, with an expected third fiscal quarter gross margin decline of 2.1 to 3.1 percentage points year-over-year, affected by trade policies and tariffs. The company is increasing spending on AI products while facing a shortage of memory chips, leading to higher costs.

K-LinePoet

2026-03-01 11:45:33

Abstract generation in progress

On Thursday, Cisco (CSCO.US) fell more than 6% in pre-market trading, trading at $80.20. According to news, Cisco expects an adjusted gross margin of 65.5% to 66.5% for the third fiscal quarter, representing a year-over-year decline of 2.1 to 3.1 percentage points, widening the decline compared to the previous fiscal quarter. In the second fiscal quarter, Cisco’s non-GAAP gross margin was 67.5%, down 1.2 percentage points from 68.7% in the same period last year.

Cisco specifically noted that EPS and profit margin guidance already incorporate the estimated impact of tariffs based on current trade policies. Given the strong performance in the second quarter in both earnings and orders, the lower gross margin range and explicit inclusion of tariff impacts in the guidance may lead the market to adopt a more cautious pricing approach in short-term trading. Analysts suggest that Cisco is increasing spending to develop new AI products, while the tech industry is also facing threats from memory chip shortages, which has driven up costs.

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