Cisco Poised for 17% Upside Amidst AI Boom
Cisco Systems (NASDAQ:CSCO) is a tech stock that's gaining traction due to its AI tailwind. Despite trading at just 21x forward earnings, Cisco has earned a BUY rating with a price target of $125.
The company's revenue growth is impressive, with a 17.6% increase in the fiscal fourth quarter and a forecasted nearly doubling of AI infrastructure revenue to $7.5B in fiscal 2027. CEO Chuck Robbins calls this 'the beginning of a super cycle.'
Rival Arista Networks (NYSE:ANET) trades at 74x trailing earnings, making Cisco the cheaper bet on AI data center networking growth. However, there is a risk that AI orders could stall or gross margins keep sliding.
Cisco's AI order book is strong, with $9.3B in AI infrastructure orders for the fiscal year. The company has also added three new hyperscaler design wins in the quarter.