Cisco Systems(US:CSCO) ZACKSยท2025-07-10 15:36Core Insights - Cisco Systems (CSCO) shares closed at $69.27, slightly below the 52-week high of $69.78, with a year-to-date appreciation of 17%, outperforming the broader sector and peer Extreme Networks [1][6] - The company's aggressive push into AI and growing security dominance are significant growth drivers, with over $1 billion in AI infrastructure orders secured ahead of schedule [2][6] - Cisco is expanding its AI portfolio for data centers with new solutions and partnerships, particularly with NVIDIA, which is expected to enhance its market position [3][9] Stock Performance - CSCO stock is trading above both the 50-day and 200-day moving averages, indicating a bullish trend [6] - The stock's year-to-date increase of 17% is notable, with strong demand in the security sector contributing to its performance [6][8] Security Business Growth - Cisco's security business is experiencing strong demand, with double-digit growth in orders for solutions like Cisco Secure Access and XDR [8] - The partnership with ServiceNow aims to enhance AI risk management and governance, further solidifying Cisco's position in the security market [10] Financial Guidance - For fiscal 2025, Cisco expects revenues between $56.5 billion and $56.7 billion, an increase from previous guidance, with non-GAAP earnings projected between $3.77 and $3.79 per share [13][14] - The Zacks Consensus Estimate for fiscal 2025 revenues is $56.59 billion, indicating a year-over-year growth of 5.18% [14] Valuation Concerns - Cisco shares are currently trading at a premium, with a forward 12-month price/sales ratio of 4.65X, higher than the industry average [15][18] - The stock is considered overvalued, which may lead to caution among investors [15][20] Long-term Prospects - Cisco's expanding portfolio and focus on AI and security position it well for sustained growth in the tech landscape [19] - Despite current challenges, the long-term outlook remains positive for investors holding the stock [19]