It Has Been Building the Internet for 40 Years. Right Now It Is Building AI.
Cisco has been building the internet for 40 years.
Right now, it is building AI.
Most traders write CSCO off as a slow, boring infrastructure name. The chart disagrees.
If you know anything about how I trade, you know I do not care about the story until the chart tells me to pay attention. Right now, the chart is paying attention.
I blew up two accounts early in my trading career. Not because I picked bad stocks. Because I lacked discipline and a repeatable process.
The system I built after those failures comes down to three things in a specific order: Trend, Pattern, Squeeze.
All three are present on CSCO right now. I am waiting for the trigger. When it fires, I act, and when it does not, I stay out.
The trend is the direction over the larger timeframe. A trend is up when the price makes higher highs and higher lows, and the moving averages stack in the right order.
An EMA, or Exponential Moving Average, is a line tracking average price with more weight on recent data.
CSCO is sitting above its 8-day EMA at $81.90 and 20-day EMA at $80.78 on the daily chart. Both are pointing up and stacked correctly on the weekly chart as well. The 200-day SMA, the long-term baseline, sits at $73.85, well below the current price.
The trend is intact across multiple timeframes.
The pattern is what price is doing within the trend. CSCO has been compressing, building higher lows along an ascending support line while the moving averages stack underneath it.
Each pullback finds support at a higher level than the last. That is the structure I want to see before a squeeze.
The squeeze occurs when volatility contracts before a move. Think of it like a coil tightening. Price stops making big swings and starts moving in a tighter range.
On CSCO, the daily chart shows a low-compression squeeze developing right now. The coil is tightening.
Now the company behind the chart.
Cisco builds the switches and routers that connect AI chips in every hyperscaler data center under construction right now.
When Google, Microsoft, or Amazon pours billions into a data center full of Nvidia GPUs, every one of those chips needs to talk to the others at high speed.
That is Cisco’s networking infrastructure. You cannot run an AI cluster without it.
AI infrastructure orders hit $2.1 billion last quarter, up from $1 billion the year before. They are guiding for $3 billion this fiscal year.
Total revenue last quarter was $15.3 billion, up 10% year over year. Networking product orders grew more than 20% for the fourth consecutive quarter.
Gross margins at 63.97%. Return on invested capital at 16.13%.
The CEO called it the company’s strongest year in its history.
They also completed the $28 billion acquisition of Splunk, which positions Cisco as a cybersecurity and data observability leader. More than half of their revenue now comes from software and services.
This is not the Cisco that sells boxes. It is the Cisco that runs the secure fabric holding enterprise AI together.
Your Action Plan
Earnings are on May 20, after the close. Five weeks out. A watchlist idea today has runway before earnings become a factor.
I do not have a position. It has everything I like in a setup, and a catalyst that’s relevant in today’s market. However, I prefer to go after stocks that can move faster and trade shorter time frames.
