UBS Reaffirms Buy Rating on Cisco Systems Amid AI Infrastructure Boom

UBS has reaffirmed its Buy rating on Cisco Systems Inc. (NASDAQ:CSCO) with a price target of $132.00. This comes as the stock continues to rise, currently trading at $119.55 and up 73% over the past year.

The firm cites industry checks and commentary from hyperscalers and neoclouds indicating accelerated demand for AI infrastructure over the past three months. UBS expects this to drive strong networking revenue and product orders in the quarter.

UBS forecasts a 26% year-over-year growth in networking revenue, representing an acceleration from 25% last quarter despite a four-point tougher comparison. The firm also sees potential upside to its order estimate due to strength in scale-across pluggables and systems following over $1 billion in Acacia orders last quarter.

Persistently high component costs will likely cap Cisco's gross margin at around 66%, resulting in potential earnings per share upside to $1.19 versus the UBS estimate of $1.16 and consensus of $1.17.