Xi and Trump Discuss Avoiding Thucydides Trap
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy CSCO?
Source: CNBC
- US-China Relationship Outlook: Xi Jinping emphasized the need for partnership over rivalry during his meeting with Trump, indicating a willingness to cooperate on sensitive issues like trade and tariffs, which could lay the groundwork for future economic relations.
- Historical Context Introduced: By referencing the 'Thucydides Trap', Xi highlighted the importance of avoiding escalation of tensions between rising and ruling powers, reflecting a commitment to peaceful coexistence that may influence international relations.
- Positive Meeting Atmosphere: Trump stated that this meeting would be better than ever before, with both sides displaying a positive attitude during discussions, potentially setting a solid foundation for subsequent trade agreements and boosting market confidence.
- Significant Market Reaction: Ahead of the talks, Cisco's shares surged 17% in after-hours trading, reflecting investor optimism regarding the tech sector and a surge in AI orders, which could impact the market performance of related stocks.
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Analyst Views on CSCO
Wall Street analysts forecast CSCO stock price to fall
13 Analyst Rating
10 Buy
3 Hold
0 Sell
Strong Buy
Current: 115.530
Low
76.00
Averages
91.30
High
100.00
Current: 115.530
Low
76.00
Averages
91.30
High
100.00
About CSCO
Cisco Systems, Inc. designs and sells a range of technologies that power the Internet. The Company is integrating its product portfolios across networking, security, collaboration, applications and cloud. The Company's segments include the Americas; Europe, Middle East, and Africa (EMEA), and Asia Pacific, Japan, and China (APJC). Its Networking product category represents its core networking technologies of switching, routing, wireless, fifth generation (5G), silicon, optics solutions and compute products. Its Security product category consists of its cloud and application security, industrial security, network security, and user and device security offerings. Its Collaboration product category consists of its meetings, collaboration devices, calling, contact center and platform as a service (CPaaS) offering. Its Observability product category consists of its full stack observability offerings.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Supply Chain Control Advantage: By designing its own silicon, Cisco has secured supply through calendar year 2026, reducing reliance on external suppliers, which enhances its competitive edge in a constrained supply chain environment and strengthens its control over future growth.
- Analysts' Optimistic Outlook: Following Cisco's latest earnings release, several financial analysts raised their price targets, with J.P. Morgan increasing its target from $96 to $120, reflecting market confidence in Cisco's supply chain management and revenue growth prospects.
- Sustained Profitability: Cisco's gross margin remains steady at approximately 66%, supported by price increases and portfolio re-engineering, with analysts projecting the company to exceed its prior growth target of 4-6% by 2027, showcasing strong profitability potential and market competitiveness.
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- US-China Relationship Outlook: Xi Jinping emphasized the need for partnership over rivalry during his meeting with Trump, indicating a willingness to cooperate on sensitive issues like trade and tariffs, which could lay the groundwork for future economic relations.
- Historical Context Introduced: By referencing the 'Thucydides Trap', Xi highlighted the importance of avoiding escalation of tensions between rising and ruling powers, reflecting a commitment to peaceful coexistence that may influence international relations.
- Positive Meeting Atmosphere: Trump stated that this meeting would be better than ever before, with both sides displaying a positive attitude during discussions, potentially setting a solid foundation for subsequent trade agreements and boosting market confidence.
- Significant Market Reaction: Ahead of the talks, Cisco's shares surged 17% in after-hours trading, reflecting investor optimism regarding the tech sector and a surge in AI orders, which could impact the market performance of related stocks.
See More
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- Management Offsets: Despite facing gross margin pressure, Cisco's management has credible offsets through pricing strategies, tighter contract terms, supply chain commitments, operational expenditure discipline, and reduced memory utilization in designs, showcasing their ability to navigate challenges.
- Rating and Price Target Adjustment: HSBC upgraded Cisco's rating from Hold to Buy and raised its price target from $77 to $137, reflecting confidence in the company's future growth potential.
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- Future Growth Drivers: HSBC analysts noted that Cisco's main growth drivers will likely be hyperscaler AI build-outs and enterprise networking upgrades, and despite gross margin pressures, the company effectively manages through pricing, contract terms, and supply chain commitments, showcasing strong management capabilities.
See More
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- Surge in AI Infrastructure Orders: Cisco reported $1.9 billion in AI infrastructure orders for Q3, a significant increase from $600 million year-over-year, indicating a strong market position and reinforcing its leadership in a rapidly growing sector.
- Supply Chain Control Advantage: By designing its own silicon, Cisco has secured supply through calendar year 2026, reducing reliance on external suppliers, which enhances its competitive edge in a constrained supply chain environment and strengthens its control over future growth.
- Analysts' Optimistic Outlook: Following Cisco's latest earnings release, several financial analysts raised their price targets, with J.P. Morgan increasing its target from $96 to $120, reflecting market confidence in Cisco's supply chain management and revenue growth prospects.
- Sustained Profitability: Cisco's gross margin remains steady at approximately 66%, supported by price increases and portfolio re-engineering, with analysts projecting the company to exceed its prior growth target of 4-6% by 2027, showcasing strong profitability potential and market competitiveness.
See More
Xi and Trump Discuss Avoiding Thucydides Trap
- US-China Relationship Outlook: Xi Jinping emphasized the need for partnership over rivalry during his meeting with Trump, indicating a willingness to cooperate on sensitive issues like trade and tariffs, which could lay the groundwork for future economic relations.
- Historical Context Introduced: By referencing the 'Thucydides Trap', Xi highlighted the importance of avoiding escalation of tensions between rising and ruling powers, reflecting a commitment to peaceful coexistence that may influence international relations.
- Positive Meeting Atmosphere: Trump stated that this meeting would be better than ever before, with both sides displaying a positive attitude during discussions, potentially setting a solid foundation for subsequent trade agreements and boosting market confidence.
- Significant Market Reaction: Ahead of the talks, Cisco's shares surged 17% in after-hours trading, reflecting investor optimism regarding the tech sector and a surge in AI orders, which could impact the market performance of related stocks.
See More
Trump's Meeting with Xi Boosts Oil Prices Amid Trade Talks
- Trump's Visit Outcomes: Following his meetings with Xi, Trump announced that China agreed to purchase U.S. crude oil, although Beijing has not confirmed this plan, leading to a rise in oil prices and indicating potential improvement in U.S.-China trade relations.
- Cerebras IPO Performance: Cerebras surged 68% on its Nasdaq debut, reaching a market cap of approximately $95 billion, marking the largest IPO in the U.S. tech sector in years, which made its founders billionaires and reflects strong market demand for emerging technologies.
- Market Dynamics Recap: The Dow Jones Industrial Average surged back above 50,000, while the S&P 500 closed above 7,500 for the first time, showcasing a robust rebound driven by surging demand for AI infrastructure, particularly with Cisco's stock rising over 13%.
- Automotive Industry Layoffs: Legacy automakers have collectively cut over 20,000 U.S. salaried jobs, about 19% of their workforce, as they adapt to technological changes, raising concerns among lawmakers about the impact of Chinese car manufacturers entering the U.S. market.
See More
HSBC Upgrades Cisco on Strong Q3 Results and AI Revenue Impact
- Strong Performance: Cisco reported stronger-than-expected third-quarter results, with shares falling 2.8% in premarket trading; however, analysts believe this indicates a structural role for AI, with expectations for AI revenue to represent 6% and 9% of group revenue in FY26 and FY27, respectively.
- Growth Drivers: Analysts identified three key growth drivers supporting Cisco's investment case: hyperscaler AI build-outs, enterprise AI networking upgrades, and campus modernization to meet rising traffic, security, and latency demands.
- Management Offsets: Despite facing gross margin pressure, Cisco's management has credible offsets through pricing strategies, tighter contract terms, supply chain commitments, operational expenditure discipline, and reduced memory utilization in designs, showcasing their ability to navigate challenges.
- Rating and Price Target Adjustment: HSBC upgraded Cisco's rating from Hold to Buy and raised its price target from $77 to $137, reflecting confidence in the company's future growth potential.
See More
Wall Street's Latest Upgrade Calls Overview
- RXO Upgrade: Stifel upgraded RXO from hold to buy, citing a favorable market setup emerging into the latter half of 2026, particularly at the intersection of improving brokerage fundamentals and unique idiosyncratic levers, indicating potential growth opportunities.
- Cisco Rating Boost: HSBC upgraded Cisco to buy from hold following the company's recent earnings report, raising the price target from $77 to $137, reflecting strong momentum in AI infrastructure and improved earnings visibility.
- Arista Networks Upgrade: Raymond James upgraded Arista Networks from market perform to outperform, anticipating improved sales growth in 2027 and beyond, particularly as the company expands into AI backend and campus applications, enhancing its market share.
- Dell Reiteration: Morgan Stanley reiterated its overweight rating on Dell, raising the price target from $205 to $280, expecting the company to raise its FY27 earnings guidance again, although supply visibility still needs to catch up with the high demand outlook for AI servers.
See More
Cisco's Strong Earnings Prompt Analyst Upgrade and Price Target Increase
- Earnings Beat Expectations: Cisco reported an adjusted earnings per share of $1.06 for the quarter ending April 25, surpassing the $1.04 expected by analysts, with revenue of $15.84 billion exceeding the $15.56 billion forecast, highlighting the company's strong performance in the AI sector.
- Analyst Upgrade: HSBC upgraded Cisco's rating from hold to buy and raised its price target from $77 to $137, indicating nearly 19% upside from Thursday's close, reflecting confidence in Cisco's future growth prospects.
- Significant Stock Surge: Following the earnings report, Cisco's shares surged 13%, and the stock has jumped 50% year-to-date, demonstrating market recognition of its AI business potential and reinforcing its leadership position in the tech sector.
- Future Growth Drivers: HSBC analysts noted that Cisco's main growth drivers will likely be hyperscaler AI build-outs and enterprise networking upgrades, and despite gross margin pressures, the company effectively manages through pricing, contract terms, and supply chain commitments, showcasing strong management capabilities.
See More
