Steve Weiss, managing partner at Short Hills Capital, said in a recent appearance on CNBC’s Halftime Report that he sold Cisco Systems (NASDAQ:CSCO) and cut his position in Meta Platforms (NASDAQ:META). Weiss said he is getting cautious because Treasury yields keep climbing. The 10-year yield sat near 5.26% during the program. He said 5% now looks like support and he sees a clear path to 6%.
Weiss said he sees no reason for the 10-year yield to come down. He pointed to oil and geopolitics, saying it is in Iran’s interest to keep oil prices high.
Why he sold Cisco
The analyst said he sold Cisco because the trade did not work. He bought the stock after it dropped following the company’s last quarterly report, hoping for a bounce. The bounce never came. Weiss said positions he is not in love with will hit the exit.
However, many won’t agree with Weiss on Cisco. For example, Lorne Steinberg Wealth Management Equity Strategy explained in its Q2 letter why it remains bullish on Cisco a relatively slow (but steady) growth rate. Billionaire Ken Fisher was also adding to Cisco earlier this year.
Why he trimmed Meta
On Meta, Weiss said the stock is still a large core position and that its future is extremely bright. He trimmed it because the position had grown too big. The stock’s gains pushed it up, and he kept adding to it on dips. Weiss said he planned to cut it when the momentum stopped, and the momentum stopped last week. He called the move “right sizing” the position.
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Digging Deeper into Cisco
Cisco Systems wins big AI data center orders because it designs its own chips, builds its own optics, and ships complete systems. It landed three new hyperscale design wins in the fourth quarter of fiscal 2026. Hyperscaler AI orders grew about 4.5 times in fiscal 2026, and management expects them to be meaningfully higher in fiscal 2027. The fiscal 2027 outlook calls for 15% revenue growth and 17% EPS growth at the midpoint.
Bear Case
Gross margin is falling as AI hardware grows in the sales mix. Non-GAAP gross margin dropped to 66.3% in the fourth quarter from 68.4% a year earlier. Nvidia adds competition. IDC data shows Nvidia became the top data center Ethernet switching vendor by revenue in the first quarter of calendar 2026.
Cisco is up about 47% so far this year, and it’s not among the 11 most overlooked AI stocks.
Valuation
Cisco trades at 20.74 times forward non-GAAP earnings against a sector median of 23.26, which is 10.82% below the sector. Enterprise value to forward sales is 5.96 times against a sector median of 3.47, or 71.95% above. The forward non-GAAP PEG ratio is 2.11 against 1.25 for the sector, or 69.55% above. Against its own five-year average, the forward P/E is 30.57% higher.
Investors pay a premium for Cisco’s margins and AI orders, and the forward multiple only looks cheap if earnings estimates hold.
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