Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Charlie and I have watched Cisco for thirty years. It was the most valuable company on earth in March 2000 at $80 a share, and it took a quarter of a century for the stock to get back there. That is the record of a business that survives and pays out, not one that compounds. What has changed in the last eighteen months is not the business so much as the story: artificial intelligence data centers need a great deal of networking, Cisco is selling a great deal of networking, and the market has re-rated a 14x to 18x earnings company to 33x trailing GAAP earnings. The fiscal 2026 results (year ended July 25, 2026) were genuinely excellent. Revenue grew 12% to $63.3 billion, GAAP earnings per share grew 31% to $3.33, fourth-quarter product orders grew 35%, and management guided fiscal 2027 revenue up another 15%. We do not dispute any of that. Our objection is arithmetic.
Recent filings analysed: 10-K (2026-09-02), 8-K (2026-08-12), 10-Q (2026-05-19), 8-K (2026-05-13).
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