Cisco Reaches New Heights with Strong Stock Performance
Cisco Systems CSCO shares achieved a 52-week high of $56.58 on Thursday, closing the day at $56.40, marking an 11.6% increase year-to-date. This performance surpasses the Zacks Computer-Networking industry’s return of 10.9%.
In the last month, CSCO shares rose by 9.6%, outpacing the industry’s 9.3% return. During the same period, the larger Zacks Computer & Technology sector saw a modest increase of 1.8%.
This success can be linked to Cisco’s improving outlook, driven by strong growth in AI-related orders. The company benefits from a broad partnership network that includes major players such as Microsoft, NVIDIA NVDA, Lenovo, and AT&T T.
Performance Over the Past Month
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Cisco shares also trade above their 50-day and 200-day moving averages, indicating a bullish market trend.
CSCO Above Key Moving Averages
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Mixed Fiscal Year 2025 Outlook for Cisco
For fiscal 2025, Cisco anticipates revenues between $55 billion and $56.2 billion, following revenue of $53.8 billion reported in fiscal 2024.
The Zacks Consensus Estimate projects fiscal 2025 revenues at $55.61 billion, reflecting a year-over-year growth of 3.36%.
In contrast, the earnings outlook appears less favorable. Non-GAAP earnings are forecasted to range from $3.52 to $3.58 per share, down from non-GAAP earnings of $3.73 per share for fiscal 2024.
The consensus earnings estimate stands at $3.56 per share, which has not changed in the past 30 days, indicating a year-over-year decline of 4.56%.
Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
CSCO has consistently surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average surprise rate of 4.93%.
Check the latest EPS estimates and surprises on Zacks Earnings Calendar.
Cisco’s Growth Driven by an Innovative Portfolio
The surge in AI workloads presents a significant growth opportunity for Cisco, backed by an innovative product portfolio. The total expected growth opportunity is $950 billion, with current markets likely growing at a CAGR of 6% and expansion markets at a CAGR of 16% between 2025 and 2027.
Cisco is heavily investing in AI, cloud technology, and cybersecurity. It currently has over $1 billion in AI orders from hyperscalers, with another billion in orders anticipated for fiscal 2025.
The Security segment has gained traction with notable solutions like XDR, Secure Access, and Multicloud Defense suites. Expected growth rates here show a CAGR of 8% for current markets and 14% for expanding markets during the same timeframe. The acquisition of Splunk is projected to further strengthen Cisco’s position in this area, with a sizable addressable market of $118 billion.
In the infrastructure sector, Cisco’s addressable market is approximately $221 billion. The ongoing digital transformation and increased use of AI and cloud solutions are benefiting the company immensely.
A rise in demand for Networking also signals growth for Cisco, as innovations in switching, routing, security, and observability allow customers to automate with advanced AI technologies and better supply-chain visibility.
Strong Partnerships Bolster Cisco’s Future
Cisco’s collaboration with NVIDIA has produced the Cisco Nexus HyperFabric AI cluster solution, which enhances scalability for generative AI tasks.
The company is also working with AT&T to create a user-friendly digital purchasing experience for businesses, utilizing 5G Fixed Wireless Access through the Meraki MG52 and MG52E gateways.
The momentum of Cisco’s Silicon One continues, with Meta Platforms META planning to implement the Cisco 8501, which integrates the power of Cisco’s technology with specialized hardware.
Additionally, Cisco is launching two new solutions based on Silicon One G200 — the Cisco 8122-64EH/EHF and Cisco Nexus 9364E-SG2 — aimed at supporting AI and machine learning advancements in both enterprise datacenters and hyperscalers.
Cisco Stock at a Higher Valuation
Currently, Cisco’s stock is trading at a premium, as demonstrated by its Value Score of C.
The forward 12-month Price/Sales ratio for CSCO stands at 4.01X, which is higher than the industry average of 3.49X.
Price/Sales Ratio (F12M)
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Why Investors Might Consider Cisco Stocks
Cisco’s expanding service offerings, a strong cybersecurity presence, and dependable partnerships make it an appealing option despite its elevated valuation.
The company remains in good financial health, which positions it well to sustain dividends and share buybacks. In fiscal 2024, Cisco returned $3.6 billion to shareholders, including $2 billion in share repurchases and $6.38 billion in dividends.
Cisco holds a Zacks Rank #2 (Buy), suggesting it could be a suitable opportunity for investors looking to add to their portfolios.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
