Cisco Systems is rapidly becoming one of Wall Street’s most closely watched artificial-intelligence trades, with a surge in bullish options activity signaling that investors are increasingly betting the decades-old networking giant could emerge as an unexpected winner in the next phase of the AI infrastructure boom.

Ahead of its earnings report on Wednesday, Cisco shares have climbed 15% over the past month, defying broader market volatility and drawing aggressive speculative interest from options traders searching for the next major technology breakout beyond the usual AI leaders.

The sudden enthusiasm surrounding Cisco is seen as an indication that investors are no longer focusing solely on headline AI chipmakers such as Nvidia. Instead, they are increasingly moving deeper into the infrastructure stack, targeting companies expected to benefit from the enormous networking, cloud, and data-center expansion required to support AI systems at scale.

That transition is reshaping how Wall Street values older technology firms previously viewed as mature or slow-growth businesses. Cisco, long associated with enterprise routers and networking hardware, is now attempting to reinvent itself as a software, security, and AI infrastructure company.

The options market suggests investors are beginning to believe that transformation may finally be gaining traction. More than 75,000 call options had traded in Cisco by midday Friday, compared with just 16,000 put contracts, according to market data.

The imbalance indicates overwhelmingly bullish positioning. More notably, over twice as many calls traded at the ask price or higher than at the bid, signaling traders were actively paying premiums to secure upside exposure rather than merely hedging positions. Most of the activity centered around near-the-money contracts, particularly the $100 strike call expiring May 15, which became the most actively traded contract by volume.

The $95 strike expiring the same day attracted the largest premium flows. The positioning suggests traders are anticipating a potentially sharp post-earnings move higher. Even more notable is the behavior of implied volatility, a key measure of expected future price swings.

Cisco’s implied volatility surged to 47 on Friday, its highest level in more than a year and roughly in line with the volatility levels typically associated with semiconductor stocks during the AI rally. That is a remarkable development for a company traditionally regarded as a relatively stable legacy technology name.

The rise in implied volatility alongside climbing stock prices has become one of the defining characteristics of speculative AI momentum trades. It often signals growing retail participation and increasing willingness among traders to place expensive short-term bets on rapid upside moves.

That pattern previously appeared in stocks such as Intel, which staged a dramatic recovery after years of investor skepticism. Intel shares have surged roughly 88% since bullish options activity intensified ahead of earlier earnings reports, driven by renewed optimism surrounding AI-related demand for CPUs and domestic chip manufacturing.

Cisco’s rally is evidence that investors are now broadening the AI narrative even further. The logic behind the trade is increasingly tied to the enormous infrastructure demands AI places on enterprise networks and data centers. Large language models and AI agents require massive amounts of data movement between processors, storage systems, and cloud servers. That creates surging demand not only for chips, but also for the networking architecture connecting them.

This is where Cisco hopes to reposition itself. The company has spent years attempting to reduce dependence on traditional hardware sales by expanding into software subscriptions, cybersecurity, cloud networking, and AI-enabled enterprise systems. The transformation has been gradual and, at times, questioned by investors who viewed the company as lagging behind faster-growing cloud-native rivals.

But the AI boom is potentially giving Cisco a second opening. As hyperscalers and enterprises race to build AI infrastructure, networking bottlenecks are becoming a major concern. Moving data efficiently between GPUs, CPUs, and storage systems is now viewed as critical to AI performance.

That dynamic has elevated the importance of high-speed networking and data-center architecture, areas where Cisco retains deep expertise and longstanding enterprise relationships.

The market increasingly sees AI infrastructure as extending far beyond semiconductor manufacturing. The ecosystem now includes networking equipment, optical systems, cooling technology, power infrastructure, cybersecurity, and cloud orchestration software.

Cisco is attempting to position itself at the center of several of those layers simultaneously. The company has also leaned heavily into AI-related partnerships and acquisitions in recent years, particularly around observability, cybersecurity, and enterprise networking automation.

Investors appear to be betting that Wednesday’s earnings report could provide evidence that those investments are translating into stronger growth. The broader significance of Cisco’s rally lies in what it says about the current stage of the AI cycle.

Although early enthusiasm focused overwhelmingly on the companies directly producing AI chips, investors are now searching for secondary and tertiary beneficiaries capable of monetizing the enormous infrastructure expansion taking place beneath the surface of the AI economy.

That broadening is important because it suggests markets increasingly believe AI spending will be durable and system-wide rather than concentrated in a handful of firms. At the same time, the speculative intensity surrounding options trading raises concerns about overheating across parts of the technology market.

Retail traders have increasingly gravitated toward high-volatility AI-related stocks, often using short-dated call options to amplify exposure. That dynamic can accelerate rallies rapidly but also magnify reversals if expectations are not met. The sharp swings recently seen across semiconductor and AI infrastructure stocks demonstrate how quickly momentum can shift when earnings disappoint or macroeconomic conditions deteriorate.

Following Cisco’s earnings report, investors will be looking for evidence that enterprise AI spending remains strong despite inflation concerns, elevated interest rates, and geopolitical uncertainty tied to the Middle East conflict. Any indication that corporate customers are accelerating investments in networking infrastructure, cloud systems, or AI-enabled enterprise software could boost the broader bullish AI narrative.

Conversely, weak guidance or slower spending trends could raise concerns that enthusiasm surrounding AI infrastructure stocks has outpaced underlying business fundamentals.

Santa Clara County delivered a sharp legal blow to Meta Platforms on Monday, filing a lawsuit that accuses the company of knowingly profiting from widespread fraudulent advertising on Facebook and Instagram while publicly claiming to fight scams aggressively.

The complaint, filed in Santa Clara County Superior Court on behalf of all California residents, charges Meta with violating the state’s false advertising and unfair business practices laws. Prosecutors allege the social media giant tolerated and at times enabled scam ads on a massive scale, choosing revenue over meaningful enforcement.

Citing internal documents previously uncovered by Reuters, the lawsuit claims Meta raked in as much as $7 billion a year from “high-risk” scam advertisements that bore obvious signs of fraud. Rather than cracking down, the county says Meta put in place internal “guardrails” that deliberately slowed or blocked anti-scam initiatives whenever they threatened advertising revenue.

The suit seeks restitution for victims, civil penalties, and a court order forcing Meta to overhaul its practices and stop the alleged misconduct.

Santa Clara County paints a troubling picture of how the fraud allegedly operated. The complaint accuses Meta of allowing middlemen to sell “protected” ad accounts that were insulated from normal enforcement. It also claims the platform used its targeting tools to hit users who had previously engaged with similar scams, making them easier marks.

Testing cited in the lawsuit suggests Meta’s own generative AI tools frequently helped scammers create polished, convincing advertisements.

“The scale of Meta’s misconduct has reached an extraordinary level, and it needs to stop. As civil prosecutors in Silicon Valley, we have a special duty to hold tech companies accountable to the law,” County Counsel Tony LoPresti said.

The lawsuit turns Meta’s own public messaging against it. While the company has repeatedly told users and advertisers that fighting scams is a top priority and that ads receive strict reviews, prosecutors argue those statements were misleading and helped conceal how much fraudulent activity was fueling profits.

The filing even suggests Meta could dial scam ad volume up or down to smooth quarterly earnings or hit internal targets.

Meta rejected the allegations and said it plans a vigorous defense. Spokesperson Andy Stone stated: “This claim relies on Reuters reporting that distorts our motives and ignores the full range of actions we take to combat scams every day. We aggressively fight scams on and off our platforms because they’re not good for us or the people and businesses that rely on our services.”

The case carries extra weight because it comes from the heart of Silicon Valley, where Meta maintains major operations. By pursuing the suit on behalf of the entire state’s population, Santa Clara County is attempting to address alleged harms that have affected millions of Californians — particularly older adults, immigrants, and others often targeted by investment scams, fake shopping sites, and phishing schemes.

Online advertising fraud has become one of the most pervasive and costly forms of cybercrime. Victims lose billions annually, with social media platforms frequently cited as primary channels. This lawsuit highlights a growing frustration that platforms have profited handsomely from the ecosystem while shifting too much responsibility onto users and under-resourcing prevention.

Santa Clara is teaming up with prominent outside law firms, Bernstein Litowitz Berger & Grossmann, Renne Public Law Group, and Bishop Partnoy, but county officials say they will retain full control of the litigation. The firms are working on a contingency basis, meaning they only get paid if the county wins.

The lawsuit lands as Meta already faces intense global scrutiny over content moderation, youth safety, data practices, and market power. Advertising makes up the overwhelming majority of Meta’s revenue, and any successful challenge to how it polices that business could have significant financial consequences.

For years, Meta has defended itself by pointing to billions spent on safety teams, AI detection tools, and takedown efforts. Prosecutors here argue those investments have been secondary to growth, with profit considerations consistently winning out in internal decisions.

If the case advances, it could set important legal precedents about platform responsibility for third-party ads and whether profiting from foreseeable harm amounts to an unfair business practice under California law. It also adds to the steady drumbeat of accountability efforts by states and localities, filling gaps left by slower federal regulation.