Core Insights - Broadcom (AVGO) and Cisco Systems (CSCO) are experiencing strong demand due to the growth of AI infrastructure, data center expansions, and increasing cybersecurity threats [1][2][3] - Both companies are well-positioned to benefit from projected AI spending, which is expected to reach $1.48 trillion in 2025 and $2.02 trillion in 2026, compared to $987 billion in 2024 [3] Company Performance - Broadcom's AI revenues are projected to increase by 66% year-over-year to $6.2 billion in Q4 fiscal 2025, driven by demand for XPUs and Ethernet products [7][8] - Cisco's AI infrastructure orders reached $2 billion in fiscal 2025, doubling previous expectations, indicating strong market demand [11][12] Product and Technology Developments - Broadcom's XPUs, which are essential for training Generative AI models, accounted for 65% of its AI revenues in Q3 fiscal 2025, with a consolidated backlog of $110 billion [7][10] - Cisco is expanding its AI portfolio with new solutions such as the Unified Nexus Dashboard and 400G bidirectional optics, enhancing its data center capabilities [11][12] Strategic Partnerships - Cisco's partnership with NVIDIA aims to create AI-ready data center networks, integrating Cisco Nexus switches with NVIDIA's Spectrum-X architecture for improved performance [12][13] Earnings Estimates - The Zacks Consensus Estimate for Broadcom's fiscal 2025 earnings is $6.72 per share, reflecting a 38% increase over fiscal 2024 [14] - Cisco's fiscal 2026 earnings estimate has increased to $4.04 per share, suggesting a 6% growth over fiscal 2025 [15] Valuation Insights - Both companies are considered overvalued, with Broadcom trading at a forward price/sales ratio of 20.18X, significantly higher than Cisco's 4.69X [17] Future Outlook - Cisco's aggressive AI initiatives and expanding portfolio are expected to drive top-line growth, while Broadcom's partnerships and AI portfolio expansion are key catalysts for future performance [20]

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]

Core Insights - Okta (OKTA) focuses on identity and access management, while Cisco Systems (CSCO) emphasizes Threat Intelligence, Detection, and Response offerings [1] - Global end-user spending on information security is projected to reach $213.025 billion in 2025, growing from $193.408 billion in 2024, with a year-over-year growth of 12.5% expected in 2026 [2] Okta Overview - Okta's new offerings, such as Okta Identity Governance and Identity Threat Protection with Okta AI, are driving market share growth and top-line revenue [3] - The company has a strong partner ecosystem, including major players like Amazon Web Services and Microsoft, enhancing its market position [4] - Okta is developing an end-to-end secure identity fabric for non-human identities (NHIs), providing visibility and governance similar to human identities [5] - For fiscal 2026, Okta anticipates revenues between $2.875 billion and $2.885 billion, reflecting a growth rate of 10-11%, lower than the 15% growth reported in fiscal 2025 [6] Cisco Overview - Cisco's security business is experiencing strong demand, with mid-single-digit growth in orders for Cisco Secure Access and XDR in Q4 of fiscal 2025 [7] - AI Infrastructure orders from webscale customers exceeded $800 million in Q4 of fiscal 2025, contributing to total revenues of $2 billion, which is double the initial expectations [8] - Cisco's partnership with NVIDIA aims to create AI-ready data center networks, enhancing its product offerings and market competitiveness [9] - For fiscal 2026, Cisco expects revenues between $59 billion and $60 billion, indicating a growth of 5.2% over fiscal 2025 [10] Stock Performance and Valuation - Year-to-date, Cisco shares have appreciated by 14.3%, while Okta shares have returned 14.2% [11] - Both companies are currently considered overvalued, with Cisco trading at a forward Price/Sales ratio of 4.47X compared to Okta's 5.17X [14] - The Zacks Consensus Estimate for Cisco's fiscal 2026 earnings is $4.04 per share, reflecting a 6% increase, while Okta's estimate is $3.36 per share, indicating a 19.6% increase [18][19] Conclusion - Cisco's strong security portfolio and growing AI order backlog provide a competitive edge over Okta, which is gaining traction with its solutions and partner base [20]

Core Insights - Cisco Systems (CSCO) shares are currently trading at a premium with a Value Score of D, reflecting a forward 12-month price/sales ratio of 4.45X, which is higher than the Zacks Computer Networks industry's 4.16X but lower than Arista Networks (18.19X) and Broadcom (21.43X) [1][4][18] Stock Performance - Year-to-date (YTD), CSCO shares have appreciated by 13.8%, underperforming the broader Zacks Computer & Technology sector (15.9%) and peers Broadcom (46.1%) and Arista Networks (28.4%) [4][7] - Since the fourth-quarter fiscal 2025 results were reported on August 13, CSCO shares have dropped by 4.4%, attributed to slowing momentum in networking revenues, which grew by 12% year-over-year to $7.63 billion [5][6] Growth Drivers - AI Infrastructure orders from webscale customers reached $2 billion in fiscal 2025, doubling management's forecast, with over $800 million in orders reported in the fourth quarter [7][9] - Cisco's partnership with NVIDIA is expected to enhance AI capabilities, integrating Cisco Nexus switches with NVIDIA's Spectrum-X architecture for improved networking solutions [11][12] - Networking product orders have shown double-digit growth for four consecutive quarters, driven by demand in webscale infrastructure, switching, enterprise routing, and industrial IoT [13] Security Business - Cisco's security business is experiencing strong demand, with mid-single-digit growth in orders for Cisco Secure Access, Hypershield, and XDR, and a reported 14% year-over-year growth in new logos for Splunk [14] Financial Guidance - For fiscal 2026, Cisco expects revenues between $59 billion and $60 billion, up from $56.7 billion in fiscal 2025, with non-GAAP earnings projected between $4.00 and $4.06 per share [16] - The Zacks Consensus Estimate for fiscal 2026 revenues is $56.58 billion, indicating a year-over-year growth of 5.2%, while earnings are expected to grow by 6% to $4.04 per share [17] Market Position - Cisco's expanding portfolio and focus on AI and security position the company for sustained growth in a changing tech landscape, despite facing challenges from stretched valuations and competitive pressures [18][19]

Core Insights - Cisco Systems' security business is experiencing strong demand, particularly for Cisco Secure Access, Hypershield, and XDR, with mid-single-digit order growth in Q4 fiscal 2025 [1][2][10] - Security revenues reached $1.95 billion, reflecting a 9% year-over-year increase, driven by offerings from Splunk and SASE [2][10] - Cisco's collaboration with NVIDIA enhances its leadership in security by integrating Nexus switches with Spectrum-X architecture [3] Security Business Performance - Cisco's security revenues were $1.95 billion, up 9% year-over-year, with significant contributions from Splunk and SASE [2][10] - The company added 750 new customers in the reported quarter, with Splunk synergies contributing to a 14% year-over-year growth in new logos [1][10] - Excluding sluggish U.S. federal order growth, security order growth in the rest of the world increased by double digits in Q4 [2] Future Outlook - Cisco expects Q1 fiscal 2026 revenues between $14.65 billion and $14.85 billion, indicating a 6.7% growth from the previous year [4][10] - The Zacks Consensus Estimate for Q1 fiscal 2026 is set at $14.77 billion [4] - Earnings per share for Q1 fiscal 2026 are projected between 97 cents and 99 cents, suggesting a 7.7% year-over-year growth [14] Competitive Landscape - Cisco faces increasing competition from Broadcom and Okta in the enterprise security sector [5] - Broadcom's security offerings accounted for 44% of its revenues in Q2 fiscal 2025, with new tools aimed at improving security and operational efficiency [6] - Okta's AI-powered capabilities are gaining traction, enhancing its product offerings in identity security [7] Stock Performance and Valuation - Cisco shares have appreciated 16.7% year-to-date, outperforming the broader Zacks Computer and Technology sector's return of 12.9% [8] - Cisco's forward 12-month price/sales ratio is 4.59X, compared to the industry average of 4.31X, indicating potential overvaluation [12]

Industry Overview - The Zacks Computer - Networking industry is poised for growth driven by advancements in cloud computing, network security, big data, and next-gen connectivity, particularly due to the increasing applications of AI technology [1] - The demand for AI workloads and hyperscale data centers is leading to significant investments in high-speed interconnects, optical networking, and Ethernet switches, with companies aiming to leverage the multi-billion-dollar AI infrastructure opportunity [1] - The rapid deployment of 5G technology is enhancing the Internet of Things (IoT), Advanced Driver Assistance Systems, AR/VR devices, and 5G smartphones, thereby increasing the need for robust networking infrastructure [1] Trends Influencing the Industry - The Wi-Fi 7 upgrade cycle is expected to stimulate demand for innovative networking products, benefiting major players like Cisco Systems, Extreme Networks, and RADCOM [2] - The industry is experiencing heightened uncertainty due to global macroeconomic conditions and volatile supply-chain dynamics, with some telecom operators reducing or delaying capital expenditures [2][7] - The growing popularity of smart home products and IoT devices is driving innovation in networking technologies, including network virtualization and Software-Defined Networking [4] Performance Metrics - The Zacks Computer - Networking industry has outperformed the S&P 500 Composite and the broader Zacks Computer and Technology sector, gaining 31.3% over the past year compared to the sector's 18.3% and the S&P 500's 13.9% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 20.27X, which is lower than the S&P 500's 22.52X and the sector's 27.18X [14] Company Highlights - **Extreme Networks**: The company reported a 20% year-over-year revenue growth in the last quarter, driven by strong demand for its AI-driven cloud networking solutions. Its SaaS annual recurring revenues rose 24.4% year-over-year to $207.6 million [18][19] - **Cisco Systems**: Cisco is enhancing its AI capabilities across its security and collaboration platforms, with notable developments including the launch of AI-driven solutions and partnerships with NVIDIA to create AI-ready data center networks [23][24] - **RADCOM**: The company focuses on cloud-native, automated service assurance for 5G networks and aims for a revenue growth target of 15%-18% for the full year, translating to a midpoint projection of $71.1 million [28][31]

Core Insights - Cisco Systems (CSCO) shares have declined 6% following the fiscal Q4 2025 results, primarily due to slowing momentum in networking revenues, which grew 12% year over year to $7.63 billion [1][8] - The decline in stock price presents a potential buying opportunity for investors, especially considering Cisco's strong momentum in AI [1] Financial Performance - In fiscal Q4 2025, AI Infrastructure orders from webscale customers exceeded $800 million, leading to total revenues of $2 billion for fiscal 2025, which is double the management's original expectations [2] - Annual Recurring Revenues (ARR) reached $31.1 billion, up 5%, with product ARR growing by 8%. Total subscription revenues increased 3% year over year to $7.9 billion, accounting for 54% of total revenues [3] - Total Remaining Performance Obligations (RPO) increased 6% year over year to $43.5 billion, with product RPO growing 8% [3] Market Position and Comparisons - Year to date, CSCO shares have appreciated 11.8%, underperforming the broader Zacks Computer & Technology sector, which has appreciated 13.7%, and peers Broadcom (AVGO) and Arista Networks (ANET), which have appreciated 32.1% and 24.2%, respectively [4] - Cisco's shares are trading at a premium with a forward 12-month price/sales ratio of 4.65X, compared to the industry average of 4.14X, but are trading at a discount compared to Arista Networks and Broadcom [15][18] Future Guidance - For fiscal 2026, Cisco expects revenues between $59 billion and $60 billion, an increase from $56.7 billion in fiscal 2025, with projected non-GAAP earnings per share between $4 and $4.06 [8][13] - The Zacks Consensus Estimate for fiscal 2026 revenues is $56.58 billion, indicating a year-over-year growth of 5.2%, while the consensus for earnings is $4.02 per share, reflecting a growth of 5.5% [14] Strategic Initiatives - Cisco's aggressive push into AI and its growing security business are significant growth drivers, with strong demand for products like Cisco Secure Access and XDR [9][11] - The partnership with NVIDIA is expected to enhance Cisco's AI capabilities, offering solutions for AI-ready data center networks [12] Investment Outlook - An expanding portfolio positions Cisco for sustained growth in the evolving tech landscape, particularly in AI and security [21] - Cisco currently holds a Zacks Rank 2 (Buy), indicating a favorable investment opportunity for accumulation [21]

Core Insights - Cisco Systems and Dell Technologies are leading providers of AI-powered enterprise infrastructure solutions [2][3] - The demand for AI infrastructure is driving significant growth in both companies, with Cisco securing over $1 billion in AI infrastructure orders and Dell shipping $1.8 billion in AI servers in Q1 [9][13] - IDC projects AI infrastructure spending to exceed $200 billion by 2028, with a significant portion allocated to servers with embedded accelerators [4] Company Performance - Cisco's stock has appreciated 16.2% year to date, while Dell's shares have increased by 11% [5] - Cisco's security business is thriving, with strong demand for its security solutions and a growing customer base [11][12] - Dell's PowerEdge XE9680L AI-optimized server is in high demand, contributing to a healthy backlog of $14.4 billion [13] Market Trends - Global IT spending is forecasted to reach $5.61 trillion by 2025, with data center systems expected to grow by 23.2% [4] - Enterprises with large-scale hyperscale data centers will account for over 70% of spending on AI-optimized servers by 2025 [4] Valuation and Investment Appeal - Dell Technologies is considered undervalued with a Price/Sales ratio of 0.81X compared to Cisco's 4.61X [18] - Dell holds a Zacks Rank 1 (Strong Buy), while Cisco has a Zacks Rank 3 (Hold), indicating a stronger investment appeal for Dell [21][22]

Core 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]

Core Insights - Broadcom (AVGO) and Cisco Systems (CSCO) are significant players in the enterprise security software market, offering a range of solutions including endpoint, network, and identity security [2] - Enterprise spending on cybersecurity is projected to grow 14% to $118.5 billion by 2025, driven by demand for Generative AI and cloud adoption [3] - Both companies are experiencing strong stock performance, with Broadcom and Cisco shares appreciating 10.3% and 9.8% year to date, respectively [4] Broadcom (AVGO) Insights - Broadcom's security offerings are part of its broader Infrastructure Software segment, which accounted for 44% of revenues in Q2 fiscal 2025, with revenues rising 25% year over year to $6.6 billion [8] - The company anticipates infrastructure software revenues of approximately $6.7 billion in Q3 fiscal 2025, reflecting a 16% year-over-year increase [9] - Broadcom's focus on AI-powered security solutions is evident with the introduction of VMware vDefend and Incident Prediction features [10][11] - The company expects AI revenues to increase by 60% year over year to $5.1 billion in Q3 fiscal 2025, supported by strong demand for custom AI accelerators [20] Cisco Systems (CSCO) Insights - Cisco's security revenue surged 54% year over year in Q3 fiscal 2025, driven by strong demand for its security solutions and a significant multiyear deal with a financial services company [12][13] - The company is integrating AI across its security and collaboration platforms, enhancing its competitive position [12] - Cisco's security business is benefiting from the acquisition of Snap Attack and the introduction of solutions like Cisco Secure AI Factory [14] - The consensus estimate for Cisco's fiscal 2025 earnings has increased by 1.6% to $3.79 per share, indicating a 1.61% growth over fiscal 2024 [15] Valuation Insights - Both Broadcom and Cisco are considered overvalued, with Broadcom trading at a forward Price/Sales ratio of 17.48X, significantly higher than Cisco's 4.38X [17] - Despite the valuation concerns, both companies have consistently beaten earnings estimates in the past four quarters, with Cisco showing a slightly better average surprise of 3.94% compared to Broadcom's 3.2% [16]