Cisco AI update lifts outlook, spurs interest in CSCL, CSCS

Cisco Systems on Thursday reported April-quarter results that topped Wall Street estimates and raised its 2026 artificial intelligence guidance. The company now expects $4 billion in AI revenue for 2026, up from a prior $3 billion estimate, and $9 billion in AI orders, up from $5 billion. Cisco shares rallied after the announcement and trading volume in Cisco-focused ETFs increased.

The leveraged Direxion Daily CSCO 2X Bull Shares (CSCL) seeks to deliver twice the daily performance of Cisco common stock, while the Direxion Daily CSCO Bear 1X Shares (CSCS) aims to deliver the inverse of Cisco’s daily performance. Both funds reset daily and are designed for short-term, tactical use.

Investors pointed to the stronger quarter and the higher AI outlook when moving into the ETFs, citing Cisco’s shipments and pipeline as indicators of demand for networking equipment used in AI deployments.

Some analysts warned that the stock’s recent valuation could make it vulnerable to a pullback if Cisco fails to meet its AI targets, a scenario that could increase interest in the inverse CSCS as a short-term hedge or directional bet.

Morningstar analyst William Kerwin described Cisco’s AI growth as “impressive,” highlighting the company’s mix of networking and optics and its ties to major cloud customers and hyperscale builders. Kerwin noted that networking can both enable and constrain AI model performance, which influences spending on AI network infrastructure.

Kerwin modeled $8 billion in AI revenue for fiscal 2027 versus management’s $6 billion guide and projected AI revenue could reach $19 billion by the end of the decade, implying roughly 79% annualized growth from fiscal 2025 levels.

Market participants said the funds’ daily reset and leverage can cause returns to diverge from the underlying stock over multi-day holdings. Short-term volatility tied to quarterly results, order announcements or execution on AI projects may produce notable moves in Cisco shares and ETF flows.

Investors will monitor upcoming quarterly reports and order trends for signals on how quickly Cisco’s AI business is scaling.