Cisco Systems (CSCO) shares fell approximately 3.7% on Thursday. The stock ended the session as one of the worst performers on the Dow Jones Industrial Average.
Investors cited concerns regarding the company's high valuation and tightening profit margins. The stock's price-to-earnings ratio currently sits significantly above its historical average. A GuruFocus valuation model recently labeled the shares as significantly overvalued.
Recent insider selling activity further dampened market sentiment. While AI infrastructure orders drove record revenue, the shift toward AI hardware increased production costs. Rising memory prices also pressured gross margins despite a surge in AI-related demand.