Cisco (CSCO) Beats Expectations, Analyst Cites AI and Cloud Growth Drivers

Cisco Systems, Inc. (NASDAQ:CSCO) is one of the AI Stocks Making Headlines This Week.  On August 14, KeyBanc analyst Brandon Nispel reiterated an Overweight rating on the stock with a $77.00 price target. The firm cited artificial intelligence growth behind the rating affirmation.

KeyBanc noted how Cisco’s results beat expectations, with the Networking segment’s outperformance offsetting weaker results in the Security division.

It also said that it believes that investors should look past the company’s public sector weakness, focusing instead on growth opportunities in Hyperscaler/Enterprise AI, Neoclouds, and Sovereign cloud initiatives that may make up for the softness.

“Results beat expectations, with strong outperformance in Networking, partially offset by weaker Security. With guidance for FY26 being set in line with consensus at 5% y/y growth, we think there is a degree of conservatism as product order growth remains healthy at 7%. We think investors should look past Public Sector weakness, which likely hurt Security growth, given the opportunity around Hyperscaler/Enterprise AI, Neoclouds, and Sovereign could quickly offset the weakness. We continue to like CSCO for these drivers of growth, and when paired with a mix shift toward software/ subscription over time, healthy FCF growth, and shareholder returns, we believe a premium to historical valuations is warranted.”

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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