Cisco, Applied Materials earnings test AI stocks Thursday

Cisco and Applied Materials report after the close Thursday, with options pricing moves of about 7.9% and 8.8% as the results test AI infrastructure demand.

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What Do Options Markets Expect From Cisco and Applied Materials?

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 $390B, a move of that size is worth about $30B. For Applied Materials, valued near $311B, it is worth more than $23B.

Those implied moves are large for two mature, widely held technology companies. They show how much weight investors place on guidance and order commentary, not only on the quarter just reported.

What Is Applied Materials Expected to Report?

Applied Materials is expected to report fiscal fourth-quarter revenue of about $10.3B, up roughly 51% from the year-ago quarter. The company's own guidance was $10.25B, plus or minus $500M. Non-GAAP earnings per share are guided to $4.02, plus or minus 20 cents, against a consensus near $4.05. That consensus implies growth of about 87% from a year earlier.

Leading-edge foundry-logic and DRAM spending are the main drivers. Chipmakers are adding capacity to meet demand for AI accelerators and the high-bandwidth memory that goes with them, and equipment suppliers such as Applied Materials sit at the front of that spending. Shares of Applied Materials rose about 8% on Wednesday as chip stocks rebounded. Lam Research (LRCX) gained about 9% and KLA (KLAC) about 7%, so the group has already moved sharply ahead of the report.

Why Does Cisco's AI Orders Figure Matter?

Cisco's hyperscaler business matters because it shows whether AI spending is reaching networking gear. Cisco booked $9.3B of hyperscaler orders in fiscal 2026 and has pointed to about $7.5B of related revenue in fiscal 2027, up from about $4B in fiscal 2026.

For the fiscal first quarter, Cisco guided to revenue of $18.0B-$18.2B, about 21.6% higher than a year earlier. Adjusted earnings are guided to $1.32-$1.34 a share, and consensus sits near $1.33, about 33% above the prior-year quarter.

Margins are the other focus. Higher memory costs and a larger share of lower-margin hardware in the mix put pressure on gross margin. A strong revenue beat that comes with weaker margins would make Cisco's AI growth look less profitable than the headline suggests.

How Could the Results Move the Wider AI Trade?

The results could move the wider AI trade in either direction, because expectations are high at both companies. Applied Materials is guiding to growth above 50%, and its shares have just rallied sharply. Cisco is being valued as an AI beneficiary as well as a networking incumbent.

There are three broad outcomes:

• Both companies beat and raise. That would reinforce the view that AI capital spending is broadening beyond GPUs into networking and fabrication equipment.
• Solid results with cautious guidance. Given the size of the implied moves, this could prompt selling even if the quarter meets targets.
• Disappointing orders or margins. That would revive concerns about the durability of AI infrastructure spending, which has weighed on the group in recent weeks.

For ai stocks, forward commentary on wafer fab equipment spending and hyperscaler purchase plans is likely to matter more than the reported quarter.

Outlook

Cisco and Applied Materials supply the networking and manufacturing layers of the AI buildout, and both report with elevated expectations and options pricing moves near 8%. The key figures are Applied Materials' $10.3B revenue target, Cisco's $18.0B-$18.2B guidance range and its gross margin trend. The reaction in both stocks, and in peers such as Lam Research and KLA, will show whether the recent chip-equipment rally holds.