UBS Reaffirms Buy Rating for Cisco Amid Surge in AI Infrastructure Demand

UBS reconfirmed its Buy rating for Cisco Systems Inc., setting a price target of $132.00 per share. The current stock price is $119.55, which represents a 73% increase over the past year and a 52.6% gain year-to-date. However, InvestingPro analysis suggests that the shares may be overvalued compared to their Fair Value estimate.

The firm's industry checks and commentary from hyperscalers and neoclouds indicate a surge in demand for AI infrastructure over the past three months, supporting expectations of strong networking revenue and product orders in the quarter. UBS forecasts 26% year-over-year growth in networking revenue, representing an acceleration from 25% last quarter despite a tougher comparison.

The strength in scale-across pluggables and systems following more than $1 billion in Acacia orders last quarter could provide upside to the order estimate. Product order growth of 35% last quarter was the strongest in over a decade, with 19% growth excluding hyperscaler orders.