Cisco Systems(US:CSCO) ZACKS·2025-12-16 15:46Core Insights - Cisco Systems (CSCO) shares have increased by 33.8% over the past 12 months, outperforming the broader Zacks Computer & Technology sector and peers like Hewlett Packard Enterprise (HPE) and Arista Networks (ANET) due to a strong focus on AI and security [1][7][19] Financial Performance - Cisco shares closed at $78.25, nearing a 52-week high of $80.82 [1] - Total Annual Recurring Revenues reached $31.4 billion, a 5% year-over-year increase, while remaining performance obligations were $42.9 billion, up 7% year-over-year [6][7] - For fiscal 2026, Cisco expects revenues between $60.2 billion and $61 billion, compared to $56.7 billion in fiscal 2025 [14][15] AI and Networking Growth - AI infrastructure orders from webscale customers reached $2 billion in fiscal 2025, with expectations of $3 billion in fiscal 2026 [6][7] - Networking product orders grew in the high teens for five consecutive quarters, driven by demand in hyperscale infrastructure and enterprise solutions [8][9] - The company anticipates a multi-year refresh opportunity in campus networking solutions, supported by next-gen products [9] Strategic Partnerships - Cisco's collaboration with NVIDIA enhances its AI capabilities, integrating Cisco Nexus switches with NVIDIA's Spectrum-X architecture for improved networking in AI clusters [11] Guidance and Estimates - Cisco projects non-GAAP earnings of $1.01 to $1.03 per share for Q2 fiscal 2026, with revenues expected between $15 billion and $15.2 billion [12] - The Zacks Consensus Estimate for Q2 fiscal 2026 revenues is $15.12 billion, indicating an 8.1% year-over-year growth [13] Valuation Concerns - Cisco shares are considered overvalued, trading at a forward price/sales ratio of 5.03X, higher than the industry average of 4.58X [16] - The company holds a Zacks Rank 3 (Hold), suggesting a cautious approach for investors [21]