Cisco's Struggling Performance Raises Concerns Among Analysts

Cisco Systems has had an impressive run over the past six months, with its shares beating the S&P 500 by 26.4%. The stock now trades at $109.75, marking a 38.2% gain. However, despite this success, analysts are expressing concern about the company's long-term prospects.

One reason for this skepticism is Cisco's disappointing revenue growth over the past five years. With a compounded annual growth rate of only 4.9%, it falls short of the expected standard for the business services sector.

Another issue is the decline in Cisco's free cash flow margin, which has dropped by 4.6 percentage points over the last five years. This could signal increasing investment needs and capital intensity.

The company's return on invested capital (ROIC) has also declined significantly over the past few years, suggesting that management may be struggling to generate profitable growth opportunities.

In contrast, analysts recommend looking at high-quality semiconductor stocks as a better alternative. One such stock mentioned is Nvidia, which has seen impressive gains of +1,460% between June 2020 and June 2025.