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The Bull Case For Cisco Systems (CSCO) Could Change Following AI And Cybersecurity Deal Moves - Learn Why

Simply Wall St · 3d ago
  • Cisco Systems has recently been reported to be in advanced talks to acquire Israeli cybersecurity firm Axonius for about US$2.00 billion, while also emerging as a strategic investor in Elon Musk’s xAI, which closed a very large US$20.00 billion Series E round to expand AI infrastructure and products.
  • Together, these developments highlight how Cisco is coupling potential cybersecurity expansion with direct exposure to large-scale AI buildouts, reinforcing its role at the center of networking, security, and AI infrastructure.
  • We’ll now examine how Cisco’s deeper involvement in AI infrastructure investing, highlighted by its xAI participation, could reshape its investment narrative.

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Cisco Systems Investment Narrative Recap

To own Cisco, you need to believe it can turn its entrenched networking and security footprint into steady, AI‑linked growth while maintaining disciplined capital returns. The Axonius talks and xAI investment, while attention grabbing, do not yet change the main near term story, which still hinges on converting record AI infrastructure demand into sustainable, higher margin, recurring revenue, amid intense competition and the ongoing risk that large hyperscale customers could throttle orders.

The most relevant recent development here is Cisco’s participation in xAI’s US$20.00 billion Series E round, which directly ties Cisco to large scale AI data center buildouts. That investment sits alongside Cisco’s existing AI networking efforts and partnerships, and it matters mainly to the extent it strengthens Cisco’s position in AI infrastructure orders, a key potential offset to slower growth in more mature networking and collaboration products.

Yet beneath the AI excitement, investors should be aware of the risk that heavy reliance on a small group of hyperscale buyers could...

Read the full narrative on Cisco Systems (it's free!)

Cisco Systems' narrative projects $65.2 billion revenue and $14.0 billion earnings by 2028. This requires 4.8% yearly revenue growth and a $3.8 billion earnings increase from $10.2 billion today.

Uncover how Cisco Systems' forecasts yield a $85.43 fair value, a 14% upside to its current price.

Exploring Other Perspectives

CSCO 1-Year Stock Price Chart
CSCO 1-Year Stock Price Chart

Thirteen members of the Simply Wall St Community currently place Cisco’s fair value between US$61.52 and US$85.43, with views spread across that entire range. Against those differing opinions, Cisco’s dependence on large AI and cloud infrastructure orders from a relatively small customer base raises important questions about how volatile its future revenue and margins could be, so you may want to compare several of these perspectives before deciding how you see the company’s path ahead.

Explore 13 other fair value estimates on Cisco Systems - why the stock might be worth 18% less than the current price!

Build Your Own Cisco Systems Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.