Cisco (CSCO) Stock: Why This Tech Bargain Just Got Upgraded

TLDR

• Evercore ISI upgrades Cisco Systems stock to Outperform with a $100 price target, up from $80 previously
• Cisco stock rose 26% over the past year and hit its first record high since March 2000 at $80.25 in December
• The company expects $3 billion in AI revenue for fiscal 2026, representing 5% of total revenue with orders doubling year-over-year
• Campus networking refresh cycle presents $70 billion opportunity as customers upgrade eight-year-old systems to next-generation solutions
• Cisco trades at 17 times forward earnings compared to 25 times for large-cap tech peers in the Technology Select Sector ETF

Cisco Systems stock jumped 2.2% to $76.24 on Monday following an upgrade from Evercore ISI. The firm raised its rating to Outperform from In Line and boosted the price target to $100 from $80.

Cisco Systems, Inc., CSCO

The networking equipment maker has been on a tear lately. Shares climbed 26% over the past year through Friday’s close. The stock hit an all-time closing high of $80.25 on December 10.

That December peak marked Cisco’s first record high since March 27, 2000. Yes, you read that right – more than 25 years after the dot-com bubble popped, Cisco is finally back at those heights.

But this time feels different, according to Wall Street.

Multiple Growth Drivers Powering the Rally

Evercore analyst Amit Daryanani and his team pointed to several factors driving their bullish call. The campus networking business is seeing strong momentum. This segment connects end-user devices within centralized networks.

Customers with over $70 billion in total installed assets are preparing to upgrade. These systems are eight years old – the last major refresh cycle. Industry growth in the campus market should run 6% to 8% through 2026, according to Evercore’s research.

Demand for WiFi 7 technology is pushing enterprises to upgrade. They need higher-bandwidth ports and more Power over Ethernet capability.

The AI story is gaining traction too. Cisco is on track to hit $3 billion in AI revenue for fiscal 2026. That represents about 5% of total sales.

AI orders have more than doubled to over $4 billion from $2 billion last year. The company has locked in four large hyperscaler clients. It’s also winning business from enterprise and sovereign customers.

Valuation Looks Attractive

Cisco’s Silicon One chips are seeing increased adoption. Cloud vendors want supply chain diversity beyond current options. Supply concerns are driving this shift.

The new P200 product opens up additional markets. This includes Scale-across and Jericho-based segments. Cisco’s optics business should see 25%+ growth driven by 800gb pluggable deployments.

Traditional enterprise and telecom markets are recovering too. These segments get less attention but provide growth diversity. Enterprises are preparing their networks for AI readiness.

Evercore expects Cisco to sustain high single-digit sales growth. Earnings per share should grow in the low-teens percentage range on a multi-year basis.

The valuation argument is compelling. Cisco trades around 17 times forward earnings. The State Street Technology Select Sector SPDR ETF trades at a 25-times ratio.

That makes Cisco look cheap compared to large-cap tech peers. The analysts expect margin expansion of 50 to 100 basis points annually.

Risks include potential underperformance in the Security and Collaboration segments. Memory industry dynamics could create unexpected challenges. But the overall picture looks positive.

Cisco stock rose about 2% in premarket trading Monday before finishing the regular session up 2.2% at $76.24.

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