The Zacks Computer - Networking industry is expected to get a boost from momentum in cloud computing, network security, big data and cloud storage and next-gen connectivity amid the rapid use cases of AI technology. Explosive demand for AI workloads and hyperscale data centers is fueling investments in high-speed interconnects, optical networking, and Ethernet switches. Players in this space are focused on capitalizing on the multi-billion-dollar AI infrastructure opportunity. The accelerated deployment of ...

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 - Cisco Systems (CSCO) reached a 52-week high of $67.49, with a year-over-year stock increase of 14.7%, reflecting strong investor confidence in the company's prospects [1][9] - The company's growth is driven by solid earnings, margin expansion, and a positive outlook, particularly due to its focus on AI and innovative product rollouts [1][2] AI and Infrastructure - Cisco's involvement in AI-focused infrastructure is a major catalyst, with AI-related infrastructure orders surpassing $600 million in Q3 fiscal 2025, bringing the year-to-date total over $1 billion [2] - Major clients, including Meta, are contributing to the growing demand for AI-optimized networks [2] Product Demand and Innovation - There is robust demand across Cisco's broader product portfolio, with networking product orders growing in double digits, driven by web-scale infrastructure and industrial IoT products [3] - The company is accelerating its innovation pipeline, integrating security features into its networking products [3] Security Strategy - Security is a key pillar of Cisco's strategy, highlighted by the $28 billion acquisition of Splunk, which has already resulted in significant deals with major financial institutions [4] - New products like Secure Access, XDR, and Hypershield have gained traction, adding over 370 new customers in Q3 fiscal 2025 [4] Competitive Landscape - Cisco faces intensified competition from Juniper Networks and Arista Networks, which are leveraging AI-driven innovations to challenge Cisco's dominance in enterprise and cloud networking [5][6][7] - Juniper focuses on high-performance routing and integrated security, while Arista leads in AI and cloud networking, projecting over $750 million in backend AI networking revenues for 2025 [6][7] Financial Performance and Valuation - Cisco's shares have gained 14.7% year-to-date, outperforming the Zacks Computer – Networking industry's return of 13.5% [8] - The company is trading at a forward price-to-sales ratio of 4.56, which is higher than the industry's 4.32X, indicating a potentially overvalued position [10] - The Zacks Consensus Estimate for Cisco's fiscal 2025 and 2026 earnings is $3.79 and $4 per share, reflecting year-over-year growth of 1.61% and 5.63%, respectively [11]

Core Insights - Cisco Systems (CSCO) is expanding its AI portfolio for data centers with new solutions, including the Unified Nexus Dashboard and Cisco Intelligent Packet Flow, while leveraging its collaboration with NVIDIA to enhance its AI infrastructure capabilities [1][9][10] - Cisco has secured over $1 billion in AI infrastructure orders for fiscal 2025, indicating strong demand and growth potential [1][8] - The company's security revenues surged by 54% year-over-year in Q3, reflecting robust demand for its security solutions [3][12] AI Portfolio Expansion - The Unified Nexus Dashboard will consolidate services across various networks into a single interface, set to be released in July 2025 [2] - Cisco Intelligent Packet Flow utilizes real-time telemetry for proactive issue detection, available from June 10 [2] - New 400G BiDi optics are expected to launch in the second half of 2025, further enhancing Cisco's data center offerings [2] Financial Performance - Total product orders increased by 20% year-over-year, with networking product orders growing by double digits [3] - Cisco's guidance for fiscal 2025 anticipates revenues between $56.5 billion and $56.7 billion, an increase from previous estimates [13] - The Zacks Consensus Estimate for fiscal 2025 revenues is $56.59 billion, indicating a year-over-year growth of 5.18% [14] Stock Performance - Cisco shares have appreciated by 8.4% year-to-date, although this is below the Zacks Computer & Technology sector's return of 14.3% [4] - The stock is currently trading at a premium, with a forward price/sales ratio of 4.32, higher than the industry average [15] Strategic Collaborations - The partnership with NVIDIA aims to create AI-ready data center networks, enhancing Cisco's security and infrastructure capabilities [9][10] - Cisco's integration of its solutions with NVIDIA's technology is expected to simplify and secure AI infrastructure deployment [9][10] Security Business Growth - Cisco's security business is experiencing significant growth, with strong demand for solutions like Secure Access and Hypershield [12] - The introduction of Agentic AI across security and collaboration platforms is a key strategy for improving customer experience [11]

Core Viewpoint - Cisco Systems (CSCO) shares are currently trading at a premium compared to its industry peers, with a Value Score of D indicating potential overvaluation [1][15]. Financial Performance - Cisco shares have appreciated 13.6% in the past month, underperforming the industry average of 14.3% and the Zacks Computer & Technology sector's return of 15.5% [4]. - In the third quarter of fiscal 2025, Cisco's total product orders grew 20% year over year, with networking product orders increasing in double digits [8]. - Cisco expects fiscal 2025 revenues to be 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]. Market Position - Cisco is trading at a forward 12-month price/sales ratio of 4.3X, higher than the Zacks Computer Networks industry's 4.11X, and significantly above Extreme Networks (1.75X) and NETGEAR (1.23X) [1]. - Cisco's security revenues surged 54% year over year, while networking revenues increased by 8% [7]. Strategic Initiatives - Cisco has expanded its portfolio with AI factory architecture developed in collaboration with NVIDIA, leading to over $600 million in AI infrastructure orders in Q3 fiscal 2025 [9][10]. - The company is leveraging Agentic AI to enhance customer experience, with notable developments including the launch of the Renewals Agent and a new Assistant for Network Change Management [11]. Competitive Landscape - Cisco's security business is experiencing strong demand, adding over 370 customers in the reported quarter, bolstered by solutions like Cisco Secure Access and Hypershield [12]. - Despite the positive developments, Cisco faces challenges from a tough macroeconomic environment and stiff competition in the networking and security sectors [16].

Core Insights - Fortinet (FTNT) and Cisco Systems (CSCO) are significant players in the network security market, with Fortinet focusing solely on security and Cisco integrating security with broader networking solutions [1][2] Market Overview - The network security market is projected to grow from $24.95 billion in 2025 to $42.93 billion by 2030, reflecting a CAGR of 11.47% during the forecast period [2] Fortinet's Performance - Fortinet has shown strong momentum in network security, maintaining its position as the leading firewall vendor globally and achieving double-digit growth in FortiGate hardware revenues [3][4] - The unified Secure Access Service Edge (SASE) platform has been a key growth driver, with 18% year-over-year growth in SASE billings and a 73% penetration rate in large enterprise SD-WAN [4][6] - The launch of the FortiGate 700G series has enhanced Fortinet's competitive edge, delivering 5x to 10x performance over competitors [5] - Fortinet's sovereign SASE solution is gaining traction in regulated sectors, ensuring compliance while maintaining performance [6] Cisco's Performance - Cisco's network security business reported strong results, with security orders rising in the high double digits year over year, driven by product innovation and customer demand [7] - The company added over 370 new customers, benefiting from partnerships that enhance its AI-ready secure infrastructure [8] - Despite strong performance, Cisco faces challenges with historical growth comparisons and uncertainties related to tariffs and macroeconomic conditions [9] Stock Performance and Valuation - Year-to-date, FTNT shares have returned 10.2%, outperforming CSCO's 7.7% gain and the sector's decline of 1.5% [10] - FTNT's forward 12-month P/S ratio is 11.16X, significantly higher than CSCO's 4.38X, reflecting investor confidence in FTNT's growth potential [13] - The Zacks Consensus Estimate for FTNT's 2025 earnings is $2.47 per share, indicating a 4.22% year-over-year increase, while CSCO's estimate is $3.73 per share, showing no change year over year [16][17] Investment Outlook - Fortinet presents a stronger investment opportunity with consistent double-digit revenue growth and expanding SASE adoption [19] - Cisco, while promising, faces delayed revenue realization and macro uncertainties, making its near-term outlook less compelling compared to Fortinet [20]

During this presentation references to financial measures of Cisco will include references to non-GAAP financial measures. Cisco provides a reconciliation between GAAP and non-GAAP financial information on the Cisco Investor Relations website https://investor.cisco.com/financial-information/financial- results/default.aspx © 2025 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2 Q3 Fiscal Year 2025 Conference Call May 14, 2025 Forward-Looking Statements This presentation contains project ...

Core Viewpoint - Cisco Systems is expected to report strong third-quarter fiscal 2025 results, driven by improved demand in networking and security products, despite facing some macroeconomic challenges [1][3][5]. Financial Expectations - Cisco anticipates third-quarter revenues between $13.9 billion and $14.1 billion, with non-GAAP earnings expected between 90 and 92 cents per share [1]. - The Zacks Consensus Estimate for revenues is $14.05 billion, reflecting a year-over-year growth of 10.58%, while the earnings consensus is steady at 91 cents per share, indicating a growth of 3.41% year-over-year [2]. Key Growth Drivers - Improved demand for networking products, particularly in switching, enterprise routing, and industrial networking applications, is expected to benefit Cisco's results [3]. - The networking revenue estimate for the fiscal third quarter is $6.76 billion, indicating a 3.6% year-over-year growth [4]. - Cisco's security revenue is estimated at $2.195 billion, showing a significant year-over-year growth of 68.3%, driven by strong demand for solutions like XDR and Secure Access [4][5]. Market Performance - Cisco shares have gained 1% year-to-date, outperforming the Zacks Computer & Technology sector's decline of 8.5% and the Computer Networking industry's return of 0.8% [6]. - However, Cisco's stock is considered to have a stretched valuation, with a forward 12-month P/S ratio of 4.08X, higher than the industry average of 3.89X [9]. Strategic Initiatives - Cisco's investments in AI, cloud, and security are expected to drive growth, with AI infrastructure orders exceeding $700 million in the first half of fiscal 2025 [12]. - The company is leveraging AI across its portfolio, including the launch of the Renewals Agent, an AI-driven solution, and enhancing customer experience through Agentic capabilities [13]. - Cisco's security business is benefiting from strong demand for Cisco Secure Access and XDR, with both solutions gaining over 1,000 customers in the past year [14]. Partnerships and Collaborations - Cisco's partnerships with major companies like Meta Platforms, Microsoft, NVIDIA, and ServiceNow are enhancing its market position [15]. - Collaboration with NVIDIA is expanding Cisco's data center infrastructure portfolio, while the partnership with ServiceNow integrates AI-driven security solutions [16][17]. Conclusion - Cisco's near-term results are expected to benefit from a robust networking and security business, supported by a strong partner ecosystem, despite facing tariff-related and macroeconomic challenges [18].