THE AI Plumbing TRADE is The REAL AI Gold Rush...

Cisco just shocked Wall Street with a massive earnings surge, a 20% stock pop, and a raised AI infrastructure order target to $9 billion. But the real story is not just Cisco’s quarter — it’s what this says about where the real money in the AI economy is flowing.

In this episode, Mark Malek breaks down why Cisco’s networking, data center switching, security, and AI infrastructure orders may reveal the next phase of the AI buildout — and why retail investors may be looking in the wrong place. He also explains the darker side of the story: thousands of layoffs happening at the same time companies are being rewarded for AI-driven restructuring.

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Transcript

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While 4,000 Cisco employees just found out that their jobs were gone, the stock that they helped build just jumped 20%. By the end of this video, you're going to understand exactly why the company that builds the internet's plumbing just had its single biggest earnings surge in recent memory, what$9 billion in AI orders actually means for your portfolio, and what the mainstream narrative is getting completely wrong about this story. Because the headline, it's not about Cisco. It's about what Cisco tells us about where the real money in the AI economy is going. And my friends, it's not going where most retail investors are looking. So better pay attention. But first, let me take you back to something that makes me smile. I remember walking into my in-law's house in the late 1980s and watching my father-in-law work the way he always did. A large accounting column pad on his lap, the Wall Street Journal strewn all over the place, and a ticker crawling at the bottom of his television. He was watching FNET, that was Financial News Network, which is what eventually became CNBC, the one that we all know and love. And I noticed something. Certain symbols kept showing up with unusual frequency. A-A-P-L, MSFT, O R C L, INTC, and then a new one started appearing more and more. And that was CSCO. You see, I knew what those symbols were because my father, my real father, was a scientist. And one of the gifts that he gave me was a deep appreciation for technology. So when Cisco systems started appearing on the ticker crawl, you better believe I paid attention. It was building the plumbing of the early internet at the time. They were making routers, switches, networking equipment, not glamorous, not at all a headline grabber, but essential in a way that only few things in technology ever are. Turn the clock forward 40 years, and last night, Cisco reminded everybody why those early observations really mattered. Guys, if you like this type of content, please click like and consider subscribing. It's important to be the know. And we hope you'll do it with us every day. Now, here is what CNBC told you this morning. Cisco reported a strong quarter. Revenue came in at$15.84 billion. That beat estimates of$15.56 billion. That was up 12% year over year. Adjusted earnings per share hit$1.6 against expectations of$1.4. Net income reached$3.4 billion. That's up 35% year over year. And the stock popped roughly 20% in after hours trading. It was one of the biggest single session moves you will see from a company of this size and maturity. And for most financial media, that's a great story. Cisco had a great quarter. Stock is up, moving on. But that is not the real story. The story is what's hidden in the details of that press release because what Cisco actually announced last night is not just a quarterly beat, it's a signal about where the real money in the AI economy is flowing at the moment. And most retail investors are looking in completely wrong direction. Now, before I show you what the market's actually pricing, let me tell you something that most financial commentators won't say out loud. Look, I have been watching Cisco for 40 years now. And for most of that time, it was the most important boring company in technology. Did you hear that? It was the most important boring company in technology. And I say that as a compliment. Here is what the mainstream media left out. Cisco came into this quarter with a full-year AI order target of$5 billion. That's what they thought they were going to earn for the whole year. A target they set themselves for, as I said, the entire fiscal year. By the end of the third quarter, with three months still left on the clock, they'd already secured$5.3 billion in AI infrastructure and hyperscaler orders. They hit their annual target early. So they raised it to$9 billion. Guys, that's an 80% increase mid-year. I did the math, so you don't have to. From a company that does not traffic in the kind of hype that tech investors have grown accustomed to. There were no leather jackets, no guys on big stages with big screens behind them, no keynote pyrotectics, just press just a press release that quietly rewrote the AI infrastructure playbook. Pay close attention. Now here's the shadow data most people missed in the earnings release. You know I love the shadow data. Networking revenue surged 25% to$8.82 billion. Product orders overall grew by 35%. Networking orders were up more than 50%. And data center switching orders, which is where the AI compute physically lives, were up more than 40%. Data center switching. That's the one I want you now to focus on. When Microsoft builds a new AI data center, or Amazon or Google or Meta, they're filling it with thousands of NVIDIA GPUs. I think we all know that by now. Every single one of those GPUs has to communicate with every other GPU GPU, and they have to do it at extraordinary speed and of course scale. The thing that makes all of that stuff possible is Cisco's high-speed switching fabric. Without the switches, those GPUs are just expensive silicon sitting in a room by themselves. Cisco is the connective tissue that makes AI compute work at hyperscale. And last night's data center switching orders, up more than 40%, tells you exactly how fast that build-out is actually accelerating. The hyperscalers are not slowing down, my friends. Microsoft, Amazon, Google, Meta, they're all in a race to build the AI data center infrastructure of the next decade. And Cisco is selling the connective tissue that makes it all work smoothly. Silicon, fiber optics, high-speed switches, cybersecurity, the picks and shovels of the AI gold rush. And Cisco, my friends, is the general store. Fourth quarter revenue guidance of 16.7 to 16.9 billion obliterated the analyst consensus of 15.56 billion. When a company of Cisco's scale raised guidance by that magnitude in the back half of the year, it's not because things are trending nicely. It's because the hyperscalers are buying everything that isn't nailed down. Now, let me pause here for a second because I want to talk about a part of last night's story that made me a little bit uncomfortable. And I think it should make you uncomfortable also, because Cisco didn't just announce a$9 billion AI order. They also announced that nearly 4,000 employees are going to lose their jobs. The same press release that announced that AI jackpot also confirmed that Cisco is cutting nearly 4,000 employees. That's less than 5% of its global workforce, and it's effective today. But it's a pretty big number. The restructuring charge will run up to$1 billion pre-tax, with roughly$450 million hitting in the current quarter. CEO Chuck Robbins said the company needs focus, urgency, and discipline for the AI era. Capital is being redeployed into silicon, optics, security, and enterprise AI tools. The severance package reportedly includes free AI training courses, which I'll leave without further editorial comment because the irony, I hope, is pretty self-evident with that last statement. This is also not the first time that Cisco has pulled this lever. The company cut approximately 7,000 employees in a similar restructuring in 2024. The market rewarded that move also. And by mid-May of 26, the tech sector has already shed more than my friends, 900, I'm excuse me, 92,000 jobs, with April alone accounting for 45,000 cuts. I reported this to you before. The most volatile month for tech employment in two years. Meta is doing it. Google is also doing it. And now Cisco is doing it again. Record revenue, record orders, and a pink slip for several thousand people on the same Tuesday night. That's the defining tension of the AI era here. And I want to point that out. And every investor in this market needs to sit with it for just a moment before deciding what it means for their portfolio. Here's what I take away from all this stuff: the market is sending a very specific signal right now, and it's been sending it consistently for the better part of three years now. The companies that build the infrastructure layer of the AI economy, not the models, not the applications, but the physical and digital plumbing underneath, are being repriced higher. Cisco just became the latest and most dramatic case study in that same thesis. A 20% after hours move on a company with a half a trillion dollar market cap is the market screaming that it had been undervaluing this story. The question for you, the people trying to protect and grow capital, not just chase headlines, is whether this repricing is the beginning of a longer recognition or whether last night's move pulled forward years of appreciation into a single session. That is the question worth spending your morning thinking about. And I don't pretend to have a clean answer for that. What I do know is that the infrastructure thesis is not going away. AI needs bandwidth, AI needs compute, AI needs security, AI needs the plumbing. Cisco, they build that plumbing. I started out this morning by telling you about two very different men who shaped the way that I see the world. One who taught me to understand science and technology, and one who taught me to translate that understanding into financial decisions. For most of my early career, those two lenses lived in separate rooms. Watching Cisco start showing up on that FNN ticker crawl in the late 1980s was one of the first moments I felt both lenses click into focus simultaneously. Technology I understood, moving through a financial instrument, I was learning to read. The companies that build what the future runs on have a habit of showing up in your portfolio. And guess what? Staying there. Last night's earnings report was not just a quarterly beat. It was a reminder that the jungle, it has rules. And one of the most reliable ones is that people who build the roads tend to do just fine, even when they're laying off the road crew and pay for the next generation of highway. So, your truth bomb for today is this Cisco's 20% pop is not the story. The story is that the AI economy's most essential company was hiding in plain sight as a boring infrastructure stock. And last night, the market finally started paying attention to what is actually worth. Join me every day for Wall Street Truth Bombs, where I drop them right here before the market figures them out. And later today, we're going to talk about the man who now controls your mortgage rate, your bond yield, and the direction of every equity in your portfolio. Jerome Powell is out. Kevin Walsh is in. And I'm not sure the market fully understands what that actually means just yet. Make sure you tune in this afternoon for that. Every day, the headlines move the markets, but the real story is in the shadow data. That's why every Thursday at 4 30 p.m. Wall Street time, we go live with the radar report. We break down what's actually driving the markets: inflation, Fed policy, oil, housing, credit risks, liquidity, and the biggest macro stories Wall Street is watching right now as we speak. No spin, no narratives, no politics, just policy, just real analysis designed to help you understand the risks, the opportunities, and what could happen next. I'm Mark Malik, founder of Truth Bombs, and this is where we connect the dots before the rest of the market even catches on. Join us live every Thursday at 4 30 p.m. EST Wall Street Time for the Radar Report.