TLDR
- Cisco fell 6-7% despite record revenue of $17.3 billion as margin decline worried investors
- Cerebras dropped 15-17% after earnings despite 70% revenue growth year over year
- The S&P 500 hit a fresh intraday record helped by softer-than-expected inflation data
- Oil prices fell over 2% after a record U.S. crude inventory build of 17.4 million barrels
- Bill Ackman’s Pershing Square returned to Netflix as part of a major portfolio overhaul
Cisco Falls After Earnings Despite Record Revenue
Cisco reported record quarterly revenue of $17.3 billion, up 18% year over year. Demand for networking equipment used in AI data centers drove the growth.
The company also issued a fiscal 2027 revenue forecast of $72.2 billion to $73.4 billion, above Wall Street expectations.
Despite the strong numbers, the stock fell roughly 6-7%. Gross margin dropped to 66.3% from 68.4% a year earlier, and investors were not happy with the margin outlook management provided.
Cisco’s growing exposure to lower-margin AI hardware is lifting revenue but putting pressure on profitability at the same time.
Cerebras Tumbles as Investors Zero In on Margins
Cerebras Systems posted second-quarter GAAP revenue of $180.1 million, up around 70% year over year. Core revenue came in at $209.9 million, and the company raised its full-year core revenue guidance to between $880 million and $890 million.
The stock still dropped 15-17% after the report. Core gross margin stood at 41%, and the company’s roughly $25 billion order backlog stayed flat during the quarter.
The reaction at both Cisco and Cerebras tells a clear story. Investors in AI stocks now want more than just revenue growth. Margins and profitability are quickly becoming the new measuring stick.
S&P 500 Hits a Fresh Record as Inflation Cools
The broader market moved higher Thursday. The S&P 500 reached a fresh intraday record after July’s Producer Price Index came in below expectations.
Producer prices were flat month over month, versus an expected 0.2% rise. Annual PPI inflation slowed to 4.7% from 5.5% in June.
The data eased concerns that the Federal Reserve might need to raise interest rates further. Nvidia, Microsoft, and Apple all moved higher on the news.
Oil Prices Drop More Than 2% on Inventory Surge
Oil prices fell sharply Thursday. Brent crude dropped around 2.2% to approximately $87 per barrel, while West Texas Intermediate fell to around $81.
A surprise build in U.S. crude inventories of 17.4 million barrels drove the move. That was the largest weekly increase since January 2023.
OPEC also cut its forecast for global oil demand growth in 2026. If oil prices keep falling, it could help ease broader inflation pressure across the economy.
Bill Ackman Returns to Netflix Four Years After a $400 Million Loss
Billionaire investor Bill Ackman has overhauled his Pershing Square portfolio and returned to Netflix. He disclosed six new positions including Netflix, Visa, Mastercard, Alcon, Intercontinental Exchange, and S&P Global.
Ackman originally bought Netflix shares in early 2022 before selling just months later at a loss of more than $400 million, after a disappointing subscriber report hit the stock hard.
His return signals that he believes the company has changed. Netflix has since built out an advertising business and moved into live sports content, reshaping how it makes money.
It is one of the largest portfolio overhauls Pershing Square has made in years.
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