Cisco shares fall on February 12 as margin guidance and memory costs weigh

Cisco shares fell sharply on February 12, the day after a revenue and EPS beat, because the company guided margins lower. Cisco guided third-quarter non-GAAP gross margin to about 66%, down roughly 150 basis points from the prior quarter, and analysts tied the drop to memory price inflation and a heavier mix of hardware. The reaction shows the market is pricing AI-driven hardware growth against thinner margins.

• Q2 non-GAAP gross margin 67.5%, down from 68.7% a year earlier
• Q3 non-GAAP gross margin guided to about 66%, down about 150 basis points sequentially
• Analysts cited memory price inflation and higher hardware mix
• Cisco says it has raised prices and is changing contract terms to pass costs on faster