{"id":20104,"date":"2026-11-15T13:53:48","date_gmt":"2026-11-15T19:53:48","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=20104"},"modified":"2026-11-15T13:53:48","modified_gmt":"2026-11-15T19:53:48","slug":"cisco-had-a-very-good-quarter-and-a-quick-look-at-nvidias-estimates-before-reporting","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=20104","title":{"rendered":"Cisco Had a Very Good Quarter and a Quick Look at Nvidia&#8217;s Estimates Before Reporting"},"content":{"rendered":"<p>When Cisco (CSCO) reported their fiscal Q1 &#8217;27 Thursday night, November 12th, after the closing the bell, the networking giant posted very good results, and not only raised their full-year revenue guidance, but also raised their full-year AI revenue guidance from $7.5 to $9 billion, per Morningstar.<\/p>\n<p>Every main metric was a solid beat, with revenue upside of 3%, operating income upside of 7% and EPS generating an upside surprise of 5%.<\/p>\n<p>Unlike a lot of large-cap tech companies which have jumped on the AI parade, Cisco is still free-cash-flow positive although capex has increased sharply the last 3 quarters (more to follow on this), with Cisco sporting a 3% free-cash-flow yield as of the Q1 &#8217;27 results.<\/p>\n<p>Cisco&#8217;s operating margin jumped 340 bp&#8217;s y-o-y as well. Some of that is expense management on Cisco&#8217;s part: y-o-y operating expenses grew just 2% in fiscal Q1 &#8217;27, the lowest y-o-y growth since July &#8217;24&#8217;s 0% growth.<\/p>\n<p>Regarding the capex story, Cisco&#8217;s capex this past quarter &#8211; on a TTM or trailing-twelve-month basis &#8211; was $2.2 billion in Q1 &#8217;27, an increase of 69% and up from $1.3 billion in Oct &#8217;25 (fiscal Q1 &#8217;26) and has really just round-tripped from the $2.2 billon level in January &#8217;24. Unlike the Mag 7 companies, it appears Cisco is investing heavily but doing it in streaks, and will back off on capex as was the case from Oct &#8217;24 through January &#8217;26.<\/p>\n<p>Following the earnings release, both forward EPS and revenue estimates rose sharply, particularly EPS. Here&#8217;s a quick summary of fiscal year earnings:<\/p>\n<ul>\n<li>Fiscal &#8217;27 EPS consensus increased to $5.42 from the pre-release estimate of $5.13, i.e. the expected EPS growth rate jumped from +19% to +26%;<\/li>\n<li>Fiscal &#8217;28 EPS consensus increased to $5.94 from the pre-release estimate of $5.59, i.e. the expected EPS growth rate jumped from +9% to +10%;<\/li>\n<li>Fiscal &#8217;29&#8217;s EPS consensus increased to $6.51 from the pre-release estimate of $6.01, i.e. the expected EPS growth rate jumped from +8% to +10%;<\/li>\n<\/ul>\n<p>Revenue estimate revisions were also positive for Cisco following the quarter, but just not as robust as the EPS increases.<\/p>\n<p><em><strong>Valuation:<\/strong><\/em> the drop in the stock on Friday, November 13th was actually surprising given the strength of the numbers. This blog&#8217;s fair value model for Cisco is actually $143 per share based on the new EPS estimates, while Morningstar has raised their fair value estimate to $120. Using an average of the two estimates, with Cisco closing at $95 Friday, November 13th, leaves Cisco trading at 28% discount to perceived fair value as of last week&#8217;s close.<\/p>\n<p><em><strong>Cisco summary:<\/strong><\/em> With the Nvidia earthquake that was last week, and trying to stay up with the events over the weekend, such as the letters of support and hoping Jensen resumes the Founder \/ CEO role, it&#8217;s not a stretch to assume Nvidia will be forever changed, since all this has exposed what was thought to be a very weak board of directors, a horizontal operating structure with too many direct reports to Jensen, and an ad hoc circular financing and decision-making process where one man&#8217;s opinion ruled all. At the very least you&#8217;d expect some of the financings to slow as &#8220;new Nvidia&#8221; grapples what will inevitably be a different landscape landscape moving forward.<\/p>\n<p>The question I have is how does this impact the tertiary players like Cisco and others (some public and some still privately-held) and what are the ripple effects throughout the AI rollout ?<\/p>\n<p>The Mag 7 aren&#8217;t likely to impacted too greatly, and if capex slowed for the tech giants it would actually be a positive since it would help repair their now negative free-cash-flow.<\/p>\n<p>The question I&#8217;ve wondered about regarding Cisco is how much does Cisco control their own destiny (so to speak) and how much of the recent stock price improvement is simply a function of the giant AI tsunami ?<\/p>\n<p><em><strong>Nvidia numbers:\u00a0<\/strong><\/em><\/p>\n<p>Since Cisco&#8217;s quarter couldn&#8217;t be discussed with talking more about Nvidia, and with Nvidia scheduled to release their fiscal Q3 &#8217;27 earnings after the bell on Tuesday night, here&#8217;s the Nvidia EPS and revenue revision history for the AI giant:<\/p>\n<p>NVDA EPS estimate revisions:<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDAEPSestimaterevisions111526.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-20107\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDAEPSestimaterevisions111526-273x300.png\" alt=\"\" width=\"273\" height=\"300\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDAEPSestimaterevisions111526-273x300.png 273w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDAEPSestimaterevisions111526-137x150.png 137w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDAEPSestimaterevisions111526.png 348w\" sizes=\"auto, (max-width: 273px) 100vw, 273px\" \/><\/a>Source: LSEG consensus annual EPS estimates.<\/p>\n<p>What&#8217;s interesting about the EPS revisions is that while fiscal &#8217;27 EPS revisions have moderated, fiscal &#8217;29&#8217;s estimate has nearly doubled in the last 12 months.<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDArevestrevisions111526.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-20108\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDArevestrevisions111526-300x259.png\" alt=\"\" width=\"300\" height=\"259\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDArevestrevisions111526-300x259.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDArevestrevisions111526-150x129.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2026\/11\/NVDArevestrevisions111526.png 415w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Last quarter, just from listening to the CNBC commentary after earnings, NVDA raised both fiscal &#8217;27 AND fiscal &#8217;28 revenue estimates during the call.<\/p>\n<p>It&#8217;s surprising to hear a company raise guidance for the next fiscal or calendar year.<\/p>\n<p>After Tuesday night&#8217;s earnings call, these numbers will be updated later in the week to see if analysts have started to pull back on the forward estimates, but it&#8217;s still likely too early.<\/p>\n<p>Readers should listen for fiscal &#8217;28 guidance (doesn&#8217;t start until February 1 &#8217;27).<\/p>\n<p>This conference call is going to be interesting.<\/p>\n<p>None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. None of this information may be updated and if updated, may not necessarily be done in a timely fashion.<\/p>\n<p>Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When Cisco (CSCO) reported their fiscal Q1 &#8217;27 Thursday night, November 12th, after the closing the bell, the networking giant&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43,320],"tags":[],"class_list":["post-20104","post","type-post","status-publish","format-standard","hentry","category-csco","category-nvidia-nvda"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/20104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=20104"}],"version-history":[{"count":5,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/20104\/revisions"}],"predecessor-version":[{"id":20111,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/20104\/revisions\/20111"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}