Cisco (CSCO, Financial) is playing a pivotal role in the development of a new artificial intelligence data center in Abu Dhabi. This project, known as UAE Stargate, also involves contributions from Nvidia and OpenAI. According to insider information, Nvidia is providing the latest Blackwell GB300 systems for the center. The construction of this facility is being managed by the Emirati company G42, with its announcement being made by the White House last Thursday.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 17 analysts, the average target price for Cisco Systems Inc (CSCO, Financial) is $69.26 with a high estimate of $78.00 and a low estimate of $55.43. The average target implies an upside of 8.99% from the current price of $63.55. More detailed estimate data can be found on the Cisco Systems Inc (CSCO) Forecast page.
Based on the consensus recommendation from 23 brokerage firms, Cisco Systems Inc's (CSCO, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Cisco Systems Inc (CSCO, Financial) in one year is $55.65, suggesting a downside of 12.42% from the current price of $63.545. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Cisco Systems Inc (CSCO) Summary page.
CSCO Key Business Developments
Release Date: May 14, 2025
- Total Revenue: $14.1 billion, up 11% year-over-year.
- Non-GAAP Net Income: $3.8 billion.
- Non-GAAP Earnings Per Share: $0.96.
- Total Product Revenue: $10.4 billion, up 15%.
- Services Revenue: $3.8 billion, up 3%.
- Networking Revenue: Up 8%, with double-digit growth in switching and enterprise routing.
- Security Revenue: Up 54%, driven by Splunk and Sassy offerings.
- Collaboration Revenue: Up 4%, driven by Devices, WebEx suite, and CPaaS offerings.
- Observability Revenue: Up 24%.
- Total ARR: $30.6 billion, up 5%.
- Total Subscription Revenue: $7.9 billion, up 15%, representing 56% of total revenue.
- Total Software Revenue: $5.6 billion, up 25%.
- Total RPO: $41.7 billion, up 7%.
- Product Orders: Up 20% year-over-year; excluding Splunk, up 9%.
- Non-GAAP Gross Margin: 68.6%, up 30 basis points year-over-year.
- Non-GAAP Operating Margin: 34.5%.
- Operating Cash Flow: $4.1 billion, up 2%.
- Capital Returned to Shareholders: $3.1 billion, including $1.6 billion in dividends and $1.5 billion in share repurchases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cisco Systems Inc (CSCO, Financial) reported strong Q3 results with revenue, margins, and earnings per share all exceeding the high end of guidance ranges.
- The company achieved significant growth in annualized recurring revenue, remaining performance obligations, and subscription revenue, supporting future performance.
- AI infrastructure orders from web-scale customers exceeded $600 million in Q3, bringing the year-to-date total to over $1 billion, surpassing the fiscal year 2025 target early.
- Cisco Systems Inc (CSCO) returned $3.1 billion to shareholders through share repurchases and dividends in Q3, totaling $9.6 billion year-to-date.
- The company saw strong demand across various segments, including a 20% year-over-year growth in total product orders, driven by web-scale infrastructure and enterprise routing.
Negative Points
- Despite strong performance, Cisco Systems Inc (CSCO) faces uncertainties related to tariffs, which could impact future financial results.
- The company noted that the macroeconomic environment remains uncertain, which could affect customer purchasing behavior.
- There is a potential risk of slowing cloud CapEx, which could impact Cisco Systems Inc (CSCO)'s growth in the cloud segment.
- The transition to AI infrastructure is nonlinear, and execution challenges could affect Cisco Systems Inc (CSCO)'s ability to capitalize on this opportunity.
- Cisco Systems Inc (CSCO) faces competitive pressures in the AI and networking markets, which could impact market share and profitability.
