Isabel Lee, a Bloomberg cross-asset reporter who covers market-moving companies, breaks down big movers in the market. She walks through Cisco’s AI-driven revenue gains and margin worries. She highlights McDonald’s surprisingly strong U.S. sales powered by value deals and promos. She also covers Zillow’s profit downgrades and the stock’s sharp decline.
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insights INSIGHT
AI Growth But Margin Worries Hit Cisco
Cisco's upbeat AI-driven revenue outlook was overshadowed by a weaker-than-expected gross margin forecast for Q3.
Investors focused on the 65.5%–66.5% margin guide versus the street's 68.2%, driving a sharp after-hours drop.
insights INSIGHT
Chip Shortages Pressure Networking Margins
Analysts flagged that memory-chip shortages and higher component costs are pressuring networking companies' margins.
Cisco's increased spending on AI-focused products helps revenue but raises near-term cost pressure on gross margins.
insights INSIGHT
Value Meals Revive McDonald's Sales
McDonald's saw U.S. same-store sales jump 6.8% as value meals brought back cost-conscious customers.
The strategy to emphasize affordability helped sales beat expectations and lifted the stock modestly.
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Today's biggest winners and losers in the stock market.
On this episode of Stock Movers:
Cisco (CSCO) gave a weaker-than-expected forecast for profitability in the current quarter, overshadowing a generally positive outlook fueled by artificial intelligence gains. Cisco, the largest maker of networking equipment, has increased spending to create new AI-focused products. The tech industry also is coping with a threat from memory-chip shortages, which is boosting costs. The shares fell about 4% in late trading after the report was released. Cisco’s stock gained 30% last year.-
McDonald's (MCD) saw its US sales grow at the fastest pace in more than two years in the fourth quarter as value meals continued to resonate with cost-conscious diners. Sales from established US restaurants jumped 6.8% in the period from a year ago when foot traffic was dented by an E. coli outbreak, ahead of expectations and the highest since 2023. Earnings, excluding one-time items, also outpaced the average of estimates compiled by Bloomberg, as did comparable sales at the company’s two international divisions. The shares rose 2% at 4:04 p.m. in extended trading in New York. The stock has advanced nearly 6% this year, outpacing the gain of the S&P 500 Index over the same period.
- Zillow (Z) shares tumble as much as 18% on Wednesday after the home-search site forecast adjusted Ebitda for the first quarter that missed the average analyst estimate as the firm contends with legal costs and expenses from its partnership with Redfin.
Stock Movers