Cisco Systems (CSCO) was upgraded to Buy from Neutral by UBS due to its critical role in the buildout of artificial intelligence infrastructure.
Shares edged up 2% during early trading on Monday.
“Cisco secured more than $2B in Al orders in FY25, nearly all from hyperscalers with two-thirds full systems running Silicon One with the rest optics/optical,” said UBS analysts, led by David Vogt, in an investor note. “Enterprise and Sovereign demand is now ramping, with Enterprise orders approaching $1B, up sharply from a couple hundred million in the most recent quarter, positioning Cisco for sustained Al-fueled growth in FY26 and FY27.”
UBS also increased its price target to $88 from $74 and upped its calendar year 2027 earnings per share estimate to $4.62 from $4.34.
The financial services firm also highlighted Cisco’s campus refresh cycle.
“Cisco’s installed base includes $10s of billions in aging Cat 4K/6K gear (5-15 years old),” Vogt said. “Upgrades to AI-enabled Smart Switches are expected to drive Campus growth from 5% in FY26 to about 7% in FY27.”
They noted Cisco’s cybersecurity portfolio as well, as its integration with Splunk is gaining traction and its product Hypershield is growing by more than 20%. Cisco acquired Splunk last year for $28B in a move to strengthen its cybersecurity and data position. It was Cisco’s largest acquisition in company history.