3 Networking Stocks to Consider Amid Industry Headwinds

Industry Overview - The Zacks Computer - Networking industry is facing heightened uncertainty due to global macroeconomic conditions and volatile supply-chain dynamics, with telecom operators reducing or delaying capital expenditures [1][4] - Despite short-term challenges, the industry is expected to benefit from increased focus on cloud computing, network security, big data, and cloud storage, particularly with the rapid adoption of AI technology [1][5] Trends Influencing the Industry - The accelerated deployment of 5G technology is driving demand for robust networking infrastructure, including IoT, Advanced Driver Assistance Systems, AR/VR devices, and 5G smartphones [2][6] - The Wi-Fi 7 upgrade cycle is anticipated to further stimulate demand for innovative networking products, benefiting major players like Cisco, Extreme Networks, and NETGEAR [2][7] - Innovation in networking technologies, including network virtualization and Software-Defined Networking, is opening new business avenues as enterprises seek to manage fixed and wireless devices securely [5] Performance Metrics - The Zacks Computer - Networking industry has outperformed the S&P 500 Composite and the broader Zacks Computer and Technology sector, gaining 35% over the past year compared to the sector's 13% and the S&P 500's 12.7% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 19.90X, below the S&P 500's 21.82X and the sector's 25.79X [14] Company Highlights - Cisco Systems, Inc. (CSCO): The company is embedding AI across its security and collaboration platforms, with AI infrastructure orders exceeding $600 million in the third quarter of fiscal 2025, ahead of its$1 billion annual target [18][20] - NETGEAR, Inc. (NTGR): The company reported a 15.4% revenue increase in its NETGEAR for Business segment, but overall revenues declined by 1.5% year-over-year, highlighting challenges in certain business units [25][26] - Extreme Networks (EXTR): The company experienced a 35% year-over-year revenue growth, driven by strong demand for its AI-driven cloud networking solutions, and has raised its revenue guidance for fiscal 2025 [30][32]