Key Takeaways CSCO shares rose 33.8% in 12 months, beating sector peers on AI momentum and security strength. AI infrastructure orders hit $2B in FY25, with $3B projected for FY26 from hyperscaler clients. FY26 revenue forecast is $60.2B-$61B, but core growth outside AI faces tough year-over-year comps. Cisco Systems (CSCO) shares closed at $78.25 on Monday, which is close to 52-week high of $80.82 it hit on Dec. 10. In the trailing 12-month period, Cisco shares have jumped 33.8% outperforming the broader Z ...

Core Insights - Cisco Systems (CSCO) shares increased by 34.6% over the past 12 months, driven by a strong focus on AI and growing security capabilities [1] - The company's stock performance outpaced the broader Zacks Computer & Technology sector and competitors like Hewlett Packard Enterprise (HPE) and Arista Networks (ANET) [1] AI Infrastructure Growth - AI infrastructure orders from webscale customers reached $2 billion in fiscal 2025, doubling initial expectations [6] - In Q1 fiscal 2026, product orders from service providers and cloud customers surged by 45% year-over-year, with hyperscaler AI infrastructure orders hitting $1.3 billion [6][7] - Cisco anticipates $3 billion in AI infrastructure revenues from hyperscalers in fiscal 2026, supported by a robust pipeline exceeding $2 billion for high-performance networking products [6][7] Networking and Security Demand - The first-quarter fiscal 2026 results were bolstered by strong demand for AI infrastructure and campus networking solutions [7] - Networking product orders grew in the high teens for five consecutive quarters, driven by hyperscale infrastructure and enterprise routing [7][8] - The industrial IoT portfolio benefited from increased AI workloads, with orders growing over 25% year-over-year in Q1 fiscal 2026 [9] Product Innovations - Cisco introduced the Cisco 8223 routing system and the P200 chip, aimed at enhancing network capacity and security for AI workloads [10] - New features in Cisco AI Assistant and enhancements to the Webex Customer Experience portfolio are set to improve organizational efficiency [11] Strategic Partnerships - Cisco's collaboration with NVIDIA enhances networking capabilities for AI clusters, driving enterprise AI orders [12] - The Cisco Secure AI factory with NVIDIA aims to provide secure AI-ready data centers for various providers [12] Financial Outlook - For fiscal 2026, Cisco expects revenues between $60.2 billion and $61 billion, up from $56.7 billion in fiscal 2025 [13] - The Zacks Consensus Estimate for fiscal 2026 revenues is $60.81 billion, indicating a year-over-year growth of 7.34% [14] Valuation Concerns - Cisco shares are considered overvalued, with a Value Score of D and a forward price/sales ratio of 5.01X, higher than industry peers [15] - The stock is currently rated as a Hold, suggesting a cautious approach for investors [18][19]

Core Insights - Cisco Systems (CSCO) is expected to report first-quarter fiscal 2026 results on November 12, with anticipated revenues between $14.65 billion and $14.85 billion and non-GAAP earnings between 97 and 99 cents per share [1][8]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for revenues is $14.78 billion, reflecting a year-over-year growth of 6.78%, while the consensus for earnings remains at 98 cents per share, indicating a 7.69% increase year-over-year [2][8]. - The current estimates for fiscal first-quarter Networking revenues are projected at $7.34 billion, showing an 8.6% year-over-year growth, although this is slower than the 12% growth reported in the previous quarter [7][8]. - Security revenues are estimated at $2.24 billion, suggesting an 11% year-over-year growth, driven by strong demand for AI-powered security solutions [8][9]. Performance Trends - Cisco's earnings have consistently surpassed the Zacks Consensus Estimate in the last four quarters, with an average beat of 3.86% [4]. - Cisco shares have increased by 20.1% year-to-date, underperforming the broader Zacks Computer & Technology sector, which has risen by 24.3% [13]. Competitive Landscape - Cisco faces stiff competition from companies like Arista Networks, Dell Technologies, and Hewlett Packard Enterprise in the AI networking and enterprise security sectors [19][20]. - Despite the competition, Cisco's aggressive AI initiatives and security enhancements are seen as key growth drivers, with AI Infrastructure orders reaching $2 billion in fiscal 2025, double the initial expectations [17][20]. Innovations and Developments - Recent innovations include the introduction of the Cisco 8223 routing system and the P200 chip, aimed at enhancing data center connectivity and supporting AI workloads [18][19]. - Cisco is also expanding its Webex ecosystem and introducing new AI-powered tools to improve customer experience management [18].

Core Insights - Cisco Systems (CSCO) shares are trading close to their 52-week high, driven by aggressive AI initiatives and growing security dominance [1] - AI Infrastructure orders from webscale customers reached $2 billion in fiscal 2025, doubling initial expectations, although networking revenues declined by 3% [2][9] - Year-to-date, CSCO shares have appreciated 17.4%, underperforming the broader sector and peers like Broadcom and Arista Networks [3] Stock Performance - CSCO shares closed at $69.52, near the 52-week high of $72.55 [1] - The stock is trading at a premium with a forward 12-month price/sales ratio of 4.57X, compared to the industry average of 4.33X [7] - Despite the premium valuation, CSCO shares are trading at a discount compared to Arista Networks and Broadcom, which have higher price/sales ratios [11] Growth Drivers - Cisco's AI push and security business are significant growth drivers, with strong demand for Cisco Secure Access, Hypershield, and XDR [12][14] - The partnership with NVIDIA enhances Cisco's AI capabilities, integrating Nexus switches with Spectrum-X for improved AI data center networks [13] - New product introductions, such as the Cisco 8223 routing system and enhancements to the Webex portfolio, are expected to support growth [17][16] Financial Guidance - For fiscal 2026, Cisco projects revenues of $59-$60 billion, up from $56.7 billion in fiscal 2025, with expected non-GAAP earnings between $4.00 and $4.06 per share [19] - The Zacks Consensus Estimate for fiscal 2026 revenues is $59.58 billion, indicating a year-over-year growth of 5.2% [20] Investment Outlook - An expanding portfolio positions Cisco for sustained growth in the tech landscape, particularly in AI and security [21] - The company holds a Zacks Rank 2 (Buy), suggesting favorable conditions for investors to accumulate shares [22]