25 Years Later, Cisco Finally Recovers From the Dot-Com Crash

It has been a long time coming, but after 25 years, shares of networking hardware, software and telecommunications equipment provider Cisco Systems (NASDAQ: CSCO) have finally rebounded from the lows it experienced in the wake of the dot-com crash in March 2000. 

Bottoming out at $10.32 on Oct. 11, 2002, the stock has gained more than 658% since, while stringing together an impressive run that includes 32 earnings beats in its last 33 quarters dating back to Q3 2017. 

But the company’s rebound in share price isn’t the only thing worthy of mentioning. Cisco not only endured two and a half decades of massive stock depreciation, but it has also reinvented itself to remain relevant in an ever-shifting market environment despite fierce competition from its rival tech companies. 

Here’s what current shareholders and prospective investors can anticipate going forward.  

How Cisco Rebranded With a Multi-Pronged Approach

Cisco’s turnaround was largely predicated on its ability to reshape what the company was, and the strategies it embraced to transition from a legacy hardware provider to an essential flywheel assisting other companies with digital transformation.

Founded in 1984 by two Stanford engineers, Cisco was foundational in commercializing network hardware components, including routers and switches. In doing so, the San Jose-based firm made itself indispensable for IT infrastructure.   

But over time, Cisco was forced—largely by the dot-com bubble bursting and the subsequent fallout among tech companies—to broaden its portfolio. Today, the firm provides services including software-defined networking, cybersecurity, and edge and cloud computing solutions that help organizations build and manage modern IT environments.

That required a multi-pronged approach to reinventing its services, moving from a legacy hardware-centric model to one that involves subscription services, AI capabilities, and comprehensive end-to-end solutions for its customers. 

Teaching an Old Dog New Tricks

Subscriptions have played a notable role in that process. Cisco has been able to shift away from one-off hardware sales while refocusing on recurring software and subscription revenue streams. 

In the company’s Q1 earnings call for its fiscal year 2026 (FY2026), chairman and CEO Chuck Robbins noted that Cisco is seeing increased revenue from its cloud subscriptions, allowing its clients to tap into AI adoption and expansion faster. In the first quarter, that revenue stream accounted for $8 billion, representing 54% of Cisco’s total revenue. 

Additionally, the company has leaned into AI and machine learning, positioning itself as a critical AI infrastructure provider. That has entailed Cisco developing AI-powered management capabilities and a generative AI user interface called AI Canvas for network operations, which debuted in June 2025.

The company has also made strategic acquisitions that have enabled it to enter the cybersecurity market, among others. In March 2024, Cisco acquired Splunk, a major player in the cybersecurity industry and a leader in security analytics and security information and event management (SIEM). That has positioned Cisco to provide full-stack visibility, threat detection, and data insights for its cloud customers. 

At the same time, the company has renewed its focus on hardware, launching a refresh of its core networking devices—including switches and routers powered by Cisco Silicon One—which are designed to handle the scalability and low latency requirements of AI.

Cisco’s Income Statements Are the Proof in the Pudding 

Over the past decade, Cisco’s efforts to restructure its products and services were seen through its bottom-line growth. In 2015, net income stood at $8.981 billion. At the end of fiscal 2025, that figure has grown more than 13% to $10.18 billion despite increased competition in cloud, cybersecurity, and AI. 

Meanwhile, the company’s earnings per share (EPS) growth averaged more than 943% over the same period, and the company was able to achieve that while maintaining healthy margin stability. Cisco’s gross margins have remained in the mid-60% range.

Zooming in, that’s something the company has been able to maintain on a quarterly basis. Year-over-year (YOY) revenue growth in Cisco’s Q1 2026 was a healthy 7.53%, while YOY free cash flow growth stood at more than 108% and return on capital invested stood at nearly 19% YOY. 

What Wall Street Thinks About Cisco

Based on 26 analysts covering CSCO, the stock receives a consensus Moderate Buy rating with 17 analysts assigning it a Buy rating, nine assigning it a Hold rating, and none assigning it a Sell rating.

The stock’s average 12-month price target suggests potential upside of 7.52%.

While that return may not be eye-catching, as a bonus—and a rarity among many tech firms—Cisco pays a dividend that currently yields 2.10%, or $1.64 per share per year. 

Promisingly, just 1.30% of the stock’s float is currently shorted, while institutional ownership stands at an above-average 73.33%.

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The article "25 Years Later, Cisco Finally Recovers From the Dot-Com Crash" first appeared on MarketBeat.