As AI-driven capex weighs on US tech stocks in 2026, Cisco Systems (CSCO) emerges as a defensive leader. Outperforming the Magnificent Seven, Cisco hit fresh record highs ahead of its Feb 11 earnings report. Explore the technical setup.
Chart of the week – Cisco Systems
Key takeaways
- Tech sector drag persists: US technology stocks have underperformed since January 2026 as heavy AI-related capex weighs on free cash flow, delaying returns and fuelling valuation concerns — especially for mega-cap hyperscalers.
- Cisco stands out defensively: Cisco Systems bucked the broader tech sell-off with a 5.2% weekly gain, outperforming most Magnificent Seven peers ahead of its Q4 earnings, where analysts expect solid EPS growth.
- Bullish technical setup for Cisco: CSCO has broken to fresh record highs, with strong momentum and rising volatility-adjusted relative strength versus the S&P 500, suggesting continued outperformance unless key support at 77.60 fails.
US technology stocks have continued to lag since January 2026, weighed down by persistent valuation concerns. A key drag has been the surge in capital expenditure on AI-related investments, which is pressuring free cash flow and returns.
For mega-cap hyperscalers, the payoff from these heavy AI outlays may take longer to materialise, reinforcing near-term scepticism around earnings quality and valuation sustainability.
Cisco Systems remained unscathed in the recent tech sell-off
Fig. 1: Weekly performance of Cisco Systems, Magnificent 7 & US stock indices from 2 Feb to 6 Feb 2026 (Source: MacroMicro).
Fig. 2: Cisco Systems Q2 Fiscal Year 2026 earnings per share estimates from analysts as of 6 Feb 2026 (Source: TradingView).
Cisco Systems, a key provider of enterprise networking and security systems, managed to record a positive gain of 5.2% last week and outperformed a sea of red seen on most of the mega-cap technology stocks; Nvidia (-0.1%), Microsoft (-5.3%), Alphabet (-6.1%), Meta Platforms (-6.4%), and Amazon.com (-13.4%) (see Fig. 1).
Cisco Systems will report its Q2 Fiscal Year 2026 earnings on Wednesday, 11 February, after the close of the US session.
Based on data compiled by TradingView, sell-side analysts expect Cisco Systems’ Q2 FY 2026 adjusted earnings per share to come in at $1.02, a projected 8.5% year-on-year increase from the same period a year ago (see Fig. 2).
Let's now look at the technical chart of Cisco Systems.
Cisco Systems (CSCO) is in a potential bullish acceleration mode
Fig. 3: Cisco Systems medium-term trend of 6 Feb 2026 (Source: TradingView).
The share price of Cisco Systems (CSCO) has staged a bullish breakout above its former medium-term swing high of 80.20 printed on 10 December 2025.
On Friday, 6 February 2026, it extended its rally to hit a new record closing high of 84.82.
The daily RSI momentum indicator has continued to hover around its overbought region without any clear bearish divergence condition.
In addition, the volatility-adjusted relative strength (VARS) of Cisco against the S&P 500 exchange-traded fund has continued to slope upwards significantly since 12 January 2026 and managed to trade above its 50-day moving average since 3 February 2026, which suggests a potential continuation of Cisco’s outperformance against the broader market.
Watch the 77.60 key medium-term pivotal support to maintain the bullish bias for the next medium-term resistances to come in at 86.19/87.71, 91.00, and 94.00/96.11 (Fibonacci extension clusters) (see Fig. 3).
On the other hand, failure to hold at 77.60 and a daily close below it invalidates the bullish scenario for a multi-week corrective decline to expose the next medium-term supports at 72.80 and 68.89 (close to the 200-day moving average) next.
The information presented is historical information, and past performance is not indicative of future performance.
