Cisco (CSCO, Financial) has entered into a Memorandum of Understanding to become a preferred technology partner in the Stargate UAE consortium. This strategic collaboration, involving major industry players like G42, OpenAI, Oracle, Nvidia, and SoftBank Group, aims to establish an AI data center in Abu Dhabi. The data center is planned to have a full capacity of 1 GW, with an initial phase of 200 MW expected to be operational by 2026.
As part of this initiative, Cisco will contribute its expertise by providing cutting-edge networking, security, and observability solutions. These offerings are intended to support the rapid deployment of advanced AI compute clusters. Cisco's CEO, Chuck Robbins, highlighted the transformative potential of AI when paired with the right infrastructure, emphasizing the company's dedication to facilitating innovation and overcoming complex challenges.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for Cisco Systems Inc (CSCO, Financial) is $69.86 with a high estimate of $80.00 and a low estimate of $55.43. The average target implies an upside of 9.92% from the current price of $63.56. More detailed estimate data can be found on the Cisco Systems Inc (CSCO) Forecast page.
Based on the consensus recommendation from 24 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 $55.96, suggesting a downside of 11.95% from the current price of $63.555. 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.
