Here’s Our Cisco Game Plan After a Nearly 100% Gain
Cisco Systems builds the routers and switches that move data across the internet. The stock first came into prominence in the 1990s, when it helped lead the so-called ‘dotcom’ tech revolution.
Now, the AI revolution is once again thrusting Cisco Systems into the spotlight. After a 56% year-to-date gain in 2026, how much farther can this stock rise?
The Data Must Flow
Just as water must flow, so must data. Since 1999, the amount of monthly data that flows through the internet has increased by a factor of 360,000.
In 1999, global monthly internet traffic was about 28,000 petabytes. Back then, there were about 250 million internet users worldwide.Today, an estimated 5.6 billion internet users are online, and that amount of data passes through the internet in the blink of an eye.
AI Is the Driver
Today, the AI revolution is providing another big increase in data creation and movement. Cisco, along with names like Corning (GLW), will be among the companies moving that data (see our latest update on Corning here).
We first recommended Cisco Systems at the tail end of 2024, at just under $60. Since then the stock has nearly doubled, gaining 98.6% as of Friday’s close. Can the San Jose-based networking stock continue to run?
Let’s Go to the Chart
Cisco Systems is trading far above its 50-day (blue) and 200-day (red) moving averages. The stock is extremely overbought, according to its RSI (relative strength index) indicator.
Cisco’s RSI reading is 88.71, its highest in years. On a scale from 0-100, any reading above 70 is considered overbought. Sometimes, stocks experience outsized gains while overbought, but the extremity of this reading is concerning.
Different Scenarios
Since Cisco has nearly doubled since our recommendation in December of 2024, we could trim the position by half. This would lock in a gain while reducing the position approximately to its original size.
However, both the stock and the market are trading just below their respective all-time highs. How can we protect our accounts – always our chief concern – while taking advantage of a rally that shows no signs of slowing?
Here’s Our Game Plan
I’m opting to trim the Cisco position by one-third at current levels. This will lock in a profit on one-third of the position, and maintain two-thirds.
The remaining position will be larger than the initial position by about 30%, instead of nearly 100%. This will allow us to lean into any further potential upside, while simultaneously locking in gains.
