Core Insights - Cisco Systems' security business is experiencing significant growth, with revenues increasing by 59% in fiscal 2025 to $8.09 billion, representing 19.5% of total revenues [1][10] - The acquisition of Splunk has enhanced Cisco's security offerings, particularly in Threat Intelligence, Detection, and Response (TIDR) and Extended Detection and Response (XDR) [2][10] - Cisco's security revenues for Q4 fiscal 2025 reached $1.95 billion, a 9% year-over-year increase, driven by the integration of Splunk and the expansion of Secure Access Service Edge (SASE) solutions [3][10] Security Business Performance - The integration of Splunk has led to a 14% year-over-year growth in new logos for Splunk, with Cisco adding 750 new customers through its security solutions in the reported quarter [3][10] - Orders for Cisco's security business grew in the mid-single digits, indicating positive growth prospects [3] Future Estimates - The Zacks Consensus Estimate for Q1 fiscal 2026 service revenues is projected at $2.24 billion, reflecting an 11% growth compared to the previous year [4] - The earnings estimate for Q1 fiscal 2026 is set at 98 cents per share, suggesting a 7.7% increase from the same quarter last year [13] - For fiscal 2026, the earnings estimate is $4.04 per share, indicating a 6% growth from the prior year [14] Competitive Landscape - Cisco faces strong competition in the security sector from companies like Fortinet and Okta, which have established innovative portfolios and strong market positions [5][6][7] - Fortinet is recognized for its extensive AI capabilities and has evolved into a comprehensive security ecosystem [6] - Okta's AI-powered offerings are gaining traction, particularly in identity management and security [7] Stock Performance - Cisco's stock has appreciated by 18.6% year-to-date, underperforming the broader Zacks Computer and Technology sector, which has returned 24% [8][9] - Cisco's stock is currently trading at a premium, with a trailing 12-month price/book ratio of 5.93X compared to the industry's 5.69X [15]

Core Insights - Broadcom (AVGO) and Okta (OKTA) are significant players in the enterprise security software market, with Broadcom offering a wide range of security solutions and Okta focusing on cloud-based identity solutions [1][2] Industry Overview - Gartner projects enterprise spending on cybersecurity software and network security to grow by 14% in 2025, reaching $118.5 billion, driven by demand for Generative AI and cloud adoption [2] - IDC anticipates global cybersecurity spending to increase by 12.2% year over year in 2025, with security software spending expected to grow by 14.4% year over year [2] Company Performance - Broadcom's infrastructure software revenues rose by 25% year over year to $6.6 billion in Q2 of fiscal 2025, accounting for 44% of total revenues [7] - Okta's stock has appreciated 21.1% year to date, benefiting from strong demand for its innovative security products [3][11] Product Innovations - Broadcom has introduced several AI-powered security features, including updates to VMware vDefend and Incident Prediction, aimed at enhancing threat prevention and operational efficiency [9][10] - Okta's new protocol, Cross App Access, enhances security for AI agents and improves user experience by streamlining authorization processes [12][13] Earnings Estimates - The Zacks Consensus Estimate for Broadcom's fiscal 2025 earnings is $6.64 per share, indicating a 36.34% increase over fiscal 2024 [14] - Okta's fiscal 2026 earnings estimate remains steady at $3.28 per share, suggesting a 16.73% growth over fiscal 2025 [15] Valuation Metrics - Broadcom's shares are trading at a forward Price/Sales ratio of 18.55X, significantly higher than Okta's 5.6X, indicating that Okta is currently undervalued [17] - Both companies are considered overvalued based on their Value Scores, with Broadcom rated D and Okta rated F [18] Investment Outlook - Broadcom expects its AI revenues to increase by 60% year over year to $5.1 billion in Q3 of fiscal 2025, although it anticipates sluggishness in other business segments [22] - Okta's strong growth prospects are highlighted by its 20,000 customers and $4.084 billion in remaining performance obligations as of Q1 fiscal 2026 [23] - Okta is rated as a better buy compared to Broadcom, with a Zacks Rank of 2 (Buy) versus Broadcom's 3 (Hold) [24]