Core Viewpoint - Goldman Sachs maintains a "Buy" rating on Synopsys (SNPS.US) with a 12-month target price of $700, indicating significant upside potential based on strong core business growth and strategic acquisition synergies [1] Financial Performance - Synopsys is projected to achieve total revenue of $7.299 billion in fiscal year 2025, representing a year-over-year growth of 16.5%, with non-GAAP earnings per share (EPS) expected to reach $13.70 [1] - Following the acquisition of Ansys in 2024, revenue is anticipated to surge to $10.422 billion in fiscal year 2026, reflecting a year-over-year growth rate of 42.8%, with EPS increasing to $16.90 [1] Quarterly Growth Expectations - Significant quarter-over-quarter revenue growth is expected, with Q3 of fiscal year 2025 projected to reach $1.748 billion and Q4 expected to exceed $2.492 billion, driven by the full quarterly contribution from Ansys and robust performance in the core EDA (Electronic Design Automation) business [1] Market Dynamics - Despite recent temporary export restrictions on EDA to China, Goldman Sachs believes the impact will be limited, citing strong quarterly performances from peers like Cadence, indicating resilient underlying EDA demand that can effectively counter short-term policy fluctuations [1] Strategic Focus Areas - Investors are advised to focus on three dimensions: the penetration of core EDA software in custom chip design, the scale and speed of synergies from the integration with Ansys, and the recovery pace of demand following the lifting of the ban in the Chinese market [2] - Synopsys is expected to strengthen its technological barriers in the EDA market, with anticipated disclosures of customer expansion cases and breakthroughs in design projects, particularly in AI chips and high-performance computing [2] - Based on a 40x normalized price-to-earnings valuation model, Goldman Sachs believes the current stock price does not fully reflect the long-term growth potential, maintaining the $700 target price [2]

Core Viewpoint - The Trump administration has created a corporate loyalty list ranking 553 companies based on their support for the "Big and Beautiful" tax and spending plan, with potential implications for government relations depending on their ratings [1] Group 1: Corporate Rankings - Companies are categorized as high, medium, or low partners in relation to the "Big and Beautiful" plan [1] - The list is dynamic, meaning companies can improve their ratings by supporting future Trump policies, such as trade protection or economic reforms [1] Group 2: Notable Companies - Notable "premium partners" include DoorDash, United Airlines, Delta Airlines, Uber, AT&T, Cisco, the American Airlines Association, and the Steel Manufacturers Association, all of which have actively supported the OB3 plan [1] - The American Airlines Association praised the plan for its $12.5 billion investment in air traffic control, while AT&T announced plans to accelerate infrastructure development [1]

Group 1 - Cisco's latest earnings report showed a slight decline in stock price, but analysts remain optimistic about its growth, particularly in network business driven by AI infrastructure demand [1] - Bank of America analysts noted that Cisco's revenue growth of 7.6% exceeded market expectations of 7.3%, with earnings per share at $0.99, surpassing consensus by $0.01 [1] - Cisco's network business revenue grew by 12% year-over-year and 8% quarter-over-quarter, with AI infrastructure orders reaching $800 million for the quarter and $2.1 billion for the year [1] Group 2 - Analysts from KeyBanc maintained an "overweight" rating with a target price of $77, while also raising earnings forecasts [2] - Citigroup raised its target price from $71 to $80, maintaining a "buy" rating, citing positive AI business prospects [2] - The forecast for network AI orders is approximately $2.1 billion for fiscal year 2025, with AI-related revenue expected to reach $1 billion [2]

Summary of Cisco Systems Inc Conference Call Company Overview - **Company**: Cisco Systems Inc (CSCO.O) - **Industry**: Telecom & Networking Equipment - **Market Cap**: $280,765 million - **Current Stock Price**: $70.40 - **Price Target**: Increased from $70.00 to $73.00 Key Financial Highlights - **FQ4 Earnings**: Reported non-GAAP revenue of $14.7 billion and EPS of $0.99, exceeding expectations of $14.6 billion and $0.97 respectively [10] - **Product Orders Growth**: Achieved 7% year-over-year growth in product orders, surpassing the expected 5% [3][7] - **AI Orders**: Recorded $800 million in AI webscale orders for the quarter, up from $500 million in the previous quarter, totaling over $2 billion for FY25 [7][8] - **Networking Segment**: Strong performance with double-digit growth in networking product orders, despite limited contribution from the Cat9K refresh cycle [8][10] Segment Performance - **Security Segment**: Grew by 9% year-over-year, below the expected 17%, with revenue of $1,952 million compared to the estimate of $2,095 million [8][10] - **Public Sector**: Orders declined by 6% year-over-year, indicating ongoing weakness in this area [8][10] - **Networking Strength**: The networking segment's growth is expected to continue with the upcoming Cat9K refresh cycle, which is anticipated to drive multi-year growth [8][10] Future Outlook - **FY26 Guidance**: Management maintains a top-line growth estimate of 5%, aligning with street estimates, with Q1 guidance suggesting approximately 6.5% year-over-year growth [9][10] - **Potential Risks**: The company faces risks from macroeconomic uncertainties and potential changes in tariffs, which could impact growth [11][12] Investment Thesis - **Overweight Rating**: The stock is rated as Overweight, with a price target of $73, reflecting an 18x multiple on a projected FY26 EPS of $4.03 [11][13] - **Bull Case Drivers**: Future multiple expansion is contingent on acceleration in security and AI opportunities, particularly in sovereign and enterprise sectors [7][11] - **Splunk Integration**: The acquisition of Splunk is expected to provide long-term growth opportunities, although immediate expectations are minimal [18][30] Additional Insights - **Gross Margins**: Non-GAAP gross margins were reported at 68.4%, benefiting from reduced tariff impacts [10] - **Order Growth**: Management has not observed any significant pull-forward in demand, which bodes well for the second half of the calendar year [8][10] - **Market Dynamics**: The networking market is expected to grow positively, supported by the Cat9K refresh and modernization efforts ahead of AI integration [18][30] Conclusion Cisco Systems Inc is positioned for continued growth, particularly in its networking segment, with strong performance in AI orders. However, challenges in the security segment and public sector demand highlight areas of concern. The company's strategic focus on AI and networking modernization, along with the integration of Splunk, presents a favorable long-term outlook.

Investment Rating - The report maintains a Neutral rating for Cisco (CSCO) following its earnings report, with a downgrade to Neutral from a previous rating due to a significant miss in adjusted EBITDA and a below-expectations guidance [3][7]. Core Insights - Cisco's earnings report showed solid results but lacked significant surprises, leading to debates on whether it is a core long-term investment or likely to consolidate due to a lack of upward revisions [3][6]. - There are positive indicators for Cisco, including strong demand for WiFi 7 orders and a potential upgrade cycle for its enterprise campus products, which could provide tailwinds in the future [4][5]. - Investor sentiment around Nvidia (NVDA) remains high, with a notable increase in stock price since April, but recent performance has raised questions about its relative value and market positioning [12][13]. - The software sector is experiencing a cautious sentiment, with many stocks showing signs of being oversold, leading to frustration and confusion among investors regarding the lack of price support despite solid earnings [14][16][17]. - Apple (AAPL) has outperformed the Nasdaq 100 index recently, but September is historically a challenging month for the stock, raising concerns about future performance [19][20]. Summary by Sections Cisco (CSCO) - Cisco's Q4 EPS beat expectations by only 1%, the smallest percentage beat since April 2022, leading to discussions about its long-term viability as a core holding [3][6]. - The company is seeing early demand signals for campus refreshes, particularly with WiFi 7 orders increasing significantly [4][5]. - Security revenue growth was slightly below consensus, raising concerns about Cisco's ability to meet its previous outlook for security and observability [6][7]. Nvidia (NVDA) - Nvidia's stock has increased approximately 100% since April, but recent performance has lagged behind semiconductor indices, prompting discussions about its valuation [12][13]. - Investor confidence in the AI theme remains high, but there are tactical discussions about risk-reward dynamics ahead of upcoming earnings [12][19]. Software Sector - The software sector is currently viewed with caution, with many stocks experiencing significant declines and showing oversold conditions [14][16]. - There is a mix of sentiment among investors, ranging from frustration to optimism about potential opportunities in the sector [17][18]. Apple (AAPL) - Apple has recently outperformed the Nasdaq 100, but the upcoming September period is traditionally challenging for the stock, which could impact future performance [19][20]. Size Factor - The report highlights significant movements in the size factor, indicating notable volatility between small and large-cap stocks, marking one of the largest shifts in the past five years [21][22].

Group 1 - Cisco Systems (CSCO.US) experienced a pre-market decline of 1.4% despite reporting fourth-quarter revenue and earnings per share that exceeded expectations [1] - Goldman Sachs indicated that Cisco's earnings per share forecast for the current fiscal year ranges from $4.00 to $4.06, slightly above the market expectation of $4.02 [1] - The revenue guidance for the current fiscal year is set between $59 billion and $60 billion, with a median growth of 5% year-over-year, aligning with earlier guidance of 4% to 6% growth [1] Group 2 - Goldman Sachs believes that investor expectations for revenue guidance in the current fiscal year may have upward potential, reflecting the equipment replacement cycle in campuses and contributions from artificial intelligence [1] - The outlook, while meeting expectations, is considered slightly disappointing by the market [1]

Core Viewpoint - Goldman Sachs reported that Cisco Systems' fourth-quarter revenue and earnings per share exceeded expectations, but the earnings forecast for the current fiscal year is between $4.00 and $4.06, compared to the market expectation of $4.02 [1] Financial Performance - Cisco's revenue guidance for the current fiscal year is set between $59 billion and $60 billion, with a median growth of 5% year-over-year, aligning with the earlier guidance of 4% to 6% growth [1] Investor Sentiment - Goldman Sachs believes that investor expectations for the current fiscal year's revenue guidance may have upward potential, reflecting the equipment replacement cycle in campuses and contributions from artificial intelligence, although the outlook is slightly disappointing [1] Earnings Forecast - Goldman Sachs raised its average earnings per share forecast for Cisco over the next three fiscal years by 5%, based on sustained strong demand in product segments and lower sales costs aligning with the company's gross margin guidance [1] Target Price and Rating - Goldman Sachs currently sets a target price of $71 for Cisco Systems, maintaining a "Neutral" rating [1]

Group 1 - Morgan Stanley has raised the target price for Cisco (CSCO.US) from $78 to $80 [1]

Group 1 - Cisco's Q4 FY2025 performance exceeded market expectations, with revenue growing 8% year-over-year to $14.67 billion and adjusted EPS increasing 14% to $0.99, indicating strong performance amid competitive pressures [1] - The networking business remains a significant revenue driver, with double-digit growth in networking product orders, reflecting robust demand in areas such as network infrastructure, switching equipment, enterprise routing systems, industrial IoT, and servers [1] - Cisco's AI business generated approximately $1 billion in revenue for FY2025, highlighting the rapid growth potential in the AI sector, although competition is intensifying from companies like Broadcom and HPE [1] Group 2 - For FY2026, Cisco's guidance shows cautious optimism, with adjusted EPS expected between $4.00 and $4.06, aligning closely with analyst expectations of $4.03, and projected annual revenue between $59 billion and $60 billion, slightly above the consensus of $59.49 billion [2] - CEO Chuck Robbins emphasized the company's strategy to better meet federal enterprise needs and plans to mitigate risks through acquisitions, such as the $28 billion acquisition of Splunk in 2024 to enhance capabilities in security and monitoring software [2] - Cisco is actively expanding into international markets, partnering with companies in Saudi Arabia and the UAE to capitalize on sovereign AI opportunities, with plans to strengthen these collaborations in the second half of FY2026 [3]

Core Viewpoint - Cisco's moderate forecast for the current fiscal year has disappointed investors who were expecting significant growth from artificial intelligence data center projects [1] Financial Performance - Cisco projects fiscal year sales between $59 billion and $60 billion, which is in line with Wall Street's expectation of $59.5 billion but below some analysts' previous expectations of exceeding $61 billion [1] Market Trends - Cisco is attempting to capitalize on the AI spending boom, reporting AI network infrastructure orders exceeding $800 million, up from $600 million in the previous quarter [1] - The demand for Ethernet network upgrades is being driven by cloud companies building new AI-centric data centers [1]