KeyBanc Starts Cisco (CSCO) at Overweight, Citing Shift to Subscription and AI Tailwinds

Cisco Systems Inc. (NASDAQ:CSCO) ranks among the best cloud stocks to buy according to Wall Street analysts. On June 25, KeyBanc began coverage of Cisco Systems Inc. (NASDAQ:CSCO) with a price target of $77 and an Overweight rating. The firm attributed the optimistic outlook in large part to Cisco’s strategic shift toward a subscription-based revenue model in its networking and security divisions.

According to KeyBanc, this change would improve the predictability and stability of the model, which should help valuation multiples. In contrast to five years ago, Cisco Systems Inc. (NASDAQ:CSCO) has undergone a significant change. KeyBanc states that the company’s ongoing mix shift toward subscriptions has resulted in more annual recurring revenue, a more stable revenue growth profile, and stronger gross margins excluding tariffs.

Strong industry trends that are bolstering Cisco’s expansion were also noted by the firm, such as enterprise cloud migrations and the momentum of AI, which should result in robust revenue growth.

Cisco Systems Inc. (NASDAQ:CSCO) is a well-known technology company that offers networking and IT solutions, leveraging artificial intelligence to increase network performance, security, and automation.

While we acknowledge the potential of CSCO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.