Cisco Systems and Applied Materials report quarterly results after the US market closes on Thursday, 12 November, in a double test of demand for the networking gear and chipmaking tools behind the artificial intelligence build-out. Both companies carry high expectations into the reports, and options markets are pricing in sharp moves in either direction.

Cisco reports its fiscal first quarter, covering the three months to late October, with a conference call scheduled for 4:30 p.m. Eastern Time. Applied Materials reports its fiscal fourth quarter at the same time. The two results give investors a read on AI spending from two different directions: Cisco supplies the networking that connects data centres, while Applied Materials supplies the equipment used to make the processors and memory inside them.

What Wall Street expects from Cisco

Analysts expect Cisco to report revenue of about $18.11 billion and adjusted earnings of roughly $1.32 to $1.33 a share, within the company's own guidance of $18.0 billion to $18.2 billion in revenue and $1.32 to $1.34 in adjusted earnings a share. That would mean revenue growth of about 22% and earnings growth of about a third on a year earlier.

The figure investors will watch most closely is AI infrastructure orders from hyperscalers, the largest cloud companies. Cisco booked $4.0 billion of such orders in its previous quarter and $9.3 billion across fiscal 2026, and it expects about $7.5 billion of related revenue in fiscal 2027, up from about $4 billion. Product orders jumped 35% in the last quarter, or 25% excluding hyperscalers, while revenue rose 18% to $17.3 billion.

Margins are the other test. Cisco's non-GAAP gross margin was 66.3% last quarter, and it guided to 65% to 66% for the first quarter. AI hardware earns less than software and services, so faster AI growth puts pressure on margins, and higher memory costs add to the strain. A strong revenue beat that comes with weaker margins would make Cisco's AI growth look less profitable than the headline suggests.

Cisco shares recover after Morgan Stanley downgrade

Cisco shares rose 2.66% to $100.76 on Wednesday, 11 November, as strong results from CoreWeave lifted AI hardware stocks, and premarket quotes on Thursday sat slightly lower at about $100.11. The bounce follows a month-long slide of about 20%, including a 7.62% drop on 5 November after Morgan Stanley cut the stock to equal-weight and lowered its price target to $120 from $135. The shares closed at $93.85 on Friday, 6 November, and are now testing $101.60, the level where the early-November breakdown began.

Morgan Stanley warned that customers ordering early ahead of price increases may be flattering near-term sales, and flagged the growing share of lower-margin hyperscaler hardware. For the full year, Cisco expects fiscal 2027 revenue of $72.2 billion to $73.4 billion and adjusted earnings of $5.05 to $5.11 a share.

Applied Materials expected to report 51% revenue growth

Applied Materials is expected to report fiscal fourth-quarter revenue of about $10.3 billion, up roughly 51% from a year earlier, against its own guidance of $10.25 billion, plus or minus $500 million. Adjusted earnings are guided to $4.02 a share, plus or minus 20 cents, against a consensus near $4.05, which would be growth of about 87% on the year-ago quarter.

Leading-edge foundry and memory spending is the main driver, as chipmakers add capacity to meet demand for AI accelerators and the high-bandwidth memory that goes with them. Applied Materials shares rose about 8% on Wednesday as chip stocks rebounded, with Lam Research gaining about 9% and KLA about 7%, so the group has already moved sharply ahead of the report.

Options markets price a post-earnings move of about 7.9% for Cisco and about 8.8% for Applied Materials, in either direction. On Cisco's market value of roughly $390 billion, a move of that size is worth about $30 billion; for Applied Materials, valued near $311 billion, it is worth more than $23 billion. With expectations this high, forward guidance and order commentary are likely to matter more than the reported quarter. TradingKey reports Cisco is retesting the $101.60 level ahead of the results, while Pomegra notes both reports will test whether AI capital spending is broadening beyond graphics processors into networking and fabrication equipment.