Cisco’s networking growth, AI demand prompts analyst upgrade

Cisco Systems’ (NASDAQ:CSCO) solid third quarter fiscal 2025 results and outlook prompted multiple price target increases and a ratings upgrade due to its networking growth and momentum in the artificial intelligence space.

Shares edged up 2.7% during early Thursday trading.

“With increasing confidence in a normalizing order growth recovery, we see Cisco as presenting a continued EPS upside + value re-rate story,” said Wells Fargo analysts, led by Aaron Rakers, in a Thursday note. “Cisco has traded at a 14x 5-yr. median NTM P/E (median low-high:11-18x); however, we think increasing confidence in a return to sustained growth (note: ~60% of rev via recurring subscription) + AI traction (webscale + Sovereign + enterprise) should support a 16-18x NTM P/E.”

Wells Fargo upgraded the stock to Overweight from Equal-weight and nudged its price target to $75 from $72.

Evercore ISI reiterated its Outperform rating and increased its price target to $72 from $67.

“Fundamentally, we think there are several notable factors here – AI orders came in at $600M (~2x vs. Jan-qtr) and CSCO achieved $1.0B target ahead of plan, with an expectation for further growth in FY26 driven by not just Hyperscale but also sovereign and enterprise tailwinds,” said Evercore analysts, led by Amit Daryanani, in an investor note.

Evercore also noted that Cisco embedded a worst-case scenario regarding tariffs, which leaves room for upside if that does not materialize. What’s more, U.S. federal government orders increased by double digits year over year and total enterprise orders grew by 22%.

“We think CSCO remains positioned to show sales growth in FY26 (potential acceleration?) driven by campus refresh, AI tailwinds and sovereign ramps that could help the re-rating,” Daryanani added.

Meanwhile, Morgan Stanley reiterated its Overweight rating and slightly upped its price target to $67 from $65.

“In order to get further multiple expansion to our PT, the company will still need to show evidence of campus product cycle, but we walked away encouraged on the quarter and still see opportunity for upside to FY26 estimates if macro holds up,” said Morgan Stanley analysts Meta Marshall and Mary Lenox, in a note.

Bank of America Securities reiterated their Buy rating and $76 price target following the results. The bank was impressed with Cisco’s AI order momentum and its U.S. federal strength. However, they noted slow security growth.

“The weak part was the ongoing challenges in security, despite new platform launches and Firewall refresh,” said BofA analysts, led by Tal Liani, in an investor note. “New products like SASE, Splunk and XDR are growing nicely, but being overshadowed by declines in legacy appliances.”

But they noted that Cisco’s growing federal business could support security growth, as many of its government contracts deal with cybersecurity issues.

Cisco competitor Arista Networks (ANET) was down 1.7% during early Thursday trading. Juniper Networks (JNPR) increased marginally. Dell Technologies (DELL), which also competes in the networking space, was down 1.3%. Broadcom (AVGO), which is also active in AI networking and connectivity solutions, had slid 1.5%. Cybersecurity competitors, such as Palo Alto Networks (PANW) and Fortinet (FTNT), were down 0.5% and 0.4%, respectively.