Cisco Rides on AI: Can the Stock Stay Secure in the AI Threat Era?

Cisco Systems CSCO is gaining momentum in AI infrastructure, with third-quarter fiscal 2025 AI infrastructure orders surpassing $600 million amid strong traction from webscale clients. Year to date, orders have exceeded the company’s original $1-billion target. Cisco attributes this accelerated growth to the strength of its secure networking portfolio, trusted partner base and the value it delivers to customers at the forefront of digital transformation.The growing deployment of AI has not only brought unprecedented opportunities but also a new wave of security challenges. Cisco’s AI Defense, a first-of-its-kind platform that provides full visibility into AI use across the enterprise, verifies model integrity and enforces security guardrails continuously. The latest Duo Identity and Access Management is designed to help security teams counter the growing tide of identity-related attacks intensified by AI automation.Cisco has partnered with NVIDIA to launch Secure AI Factories, a joint solution to protect AI systems at every layer. It also unveiled a partnership with ServiceNow, embedding AI Defense into their platform to centralize AI risk management, compliance and governance.HPE & ANET Challenge Cisco in AI NetworkingHewlett-Packard Enterprise HPE and Arista Networks ANET are two rising challengers to Cisco in the fast-evolving networking and AI infrastructure landscape.Hewlett-Packard is rapidly expanding in AI-driven edge and cloud infrastructure, with second-quarter fiscal 2025 revenues reaching $7.6 billion, boosted by $1 billion in AI server sales and a $3.2-billion backlog. Hewlett-Packard’s Aruba and Silver Peak platforms are gaining share in secure, cloud-managed networking, challenging Cisco.Meanwhile, Arista Networks posted $2 billion in revenues in the first quarter of 2025, driven by demand from hyperscalers like Microsoft and Meta Platforms. Arista Networks’ EOS software and Etherlink AI platforms offer agile, cost-effective networking, while its SWAG and Wi-Fi 7 solutions are gaining traction in enterprise environments. Arista Networks is aggressively targeting $750 million in campus networking revenues by year-end, posing a real threat to Cisco.CSCO’s Price Performance, Valuation & EstimatesShares of Cisco have gained 11.6% year to date compared with the Zacks Computer – Networking industry’s return of 11.3%.CSCO YTD Price Performance Chart Image Source: Zacks Investment Research From a valuation standpoint, CSCO appears overvalued, trading at a forward 12-month price-to-sales ratio of 4.45, higher than the industry’s 4.24X. Cisco has a Value Score of D.CSCO's Forward 12-Month Valuation Chart Image Source: Zacks Investment Research The Zacks Consensus Estimate for CSCO’s fiscal 2025 revenues is pegged at $56.59 billion, indicating 5.18% year-over-year growth. The consensus mark for CSCO’s 2025 earnings is pegged at $3.79 per share, which increased 1.6% over the past 30 days. The earnings figure suggests 1.61% growth over the figure reported in fiscal 2024. Image Source: Zacks Investment Research CSCO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks