AVGO vs CSCO: Which Enterprise Security Software Stock Has an Edge?

Broadcom AVGO and Cisco Systems CSCO are key providers of security software solutions for enterprises. AVGO offers Endpoint Security (Symantec and Carbon Black), Network Security, Information Security, Application Security (Carbon Black) and Identity Security solutions. Meanwhile, CSCO offers Network Security, Identity and Access Management, Secure Access Service Edge and Threat Intelligence, Detection and Response offerings.

According to Gartner’s latest data, enterprise spending on cybersecurity software and network security will grow 14% in 2025 to $118.5 billion, driven by strong demand for Generative AI (Gen AI) and cloud adoption. IDC expects global cybersecurity spending to grow 12.2% year over year in 2025, driven by increasing complexity and frequency of cyberattacks due to growing deployment of Gen AI and AI, with spending on security software to grow 14.4% year over year. The bullish projections offer significant growth opportunities for both Broadcom and Cisco.

Both companies are benefiting from strong demand for AI infrastructure, data center build-outs and an increasing threat landscape. Shares of Broadcom and Cisco have appreciated 10.3% and 9.8% year to date.

AVGO and CSCO Stock’s Performance

So, Broadcom or Cisco, which is leading the charge? Let’s find out.

AVGO Rides on Strong Infrastructure Portfolio

Broadcom’s security offerings are a part of its broader Infrastructure Software solution that accounted for 44% of revenues in the second quarter of fiscal 2025. Infrastructure software revenues jumped 25% year over year to $6.6 billion, bolstered by the successful conversion of enterprise customers to the full VMware Cloud Foundation (VCF) software stack subscription. AVGO expects infrastructure software revenues to be approximately $6.7 billion, up 16% year over year, in the third quarter of fiscal 2025.

Broadcom’s focus on delivering AI-powered, proactive security to stay ahead of evolving cyber threats has been noteworthy. In March, AVGO introduced updates to VMware vDefend, improving security planning, lifecycle management, and scalability for VCF with new tools like the Security Segmentation Assessment and Report, optimized micro-segmentation, and advanced Network Detection and Response, all aimed at improving threat prevention and operational efficiency. In April, Broadcom introduced Incident Prediction, which extends the security feature of Adaptive Protection, a unique capability of Symantec Endpoint Security Complete (SES-C).

Apart from Infrastructure solutions, strong demand for Broadcom’s application-specific integrated chips (ASICs), designed to support AI and machine learning and make these tasks more efficient, aids top-line growth. Custom AI accelerators (XPUs), which are a type of ASICs, are necessary to train Gen AI models, and they require complex integration of compute, memory, and I/O capabilities to achieve the necessary performance at lower power consumption and cost.

CSCO Benefits From Strong Security Demand, AI Push

Cisco’s aggressive AI push and growing security dominance, as reflected by the third-quarter fiscal 2025 results, are noteworthy. Security revenues jumped 54% year over year, while orders grew in high double digits and included a large multiyear deal with a major financial services company for Splunk's security and observability platforms. Cisco’s strategy of infusing AI across Security and Collaboration platforms and developing Agentic capabilities across the portfolio is a key catalyst.

Cisco’s security business is benefiting from strong demand for both Cisco Secure Access, Hypershield and XDR. On a combined basis, these solutions added more than 370 customers in the fiscal third quarter. The acquisition of Snap Attack enhances Splunk’s capability. 

Moreover, Cisco Secure AI Factory with NVIDIA is founded on the NVIDIA Spectrum-X Ethernet networking platform. Security is at the core of the solution and helps enterprises simplify, deploy, manage and secure AI infrastructure at any scale. Cisco AI Defense and hybrid mesh firewall enable enterprise customers to build and secure data centers to develop and run AI workloads.

AVGO’s and CSCO’s Earnings Estimate Revision Positive

The Zacks Consensus Estimate for AVGO’s fiscal 2025 earnings is pegged at $6.63 per share, up by a penny over the past 30 days, indicating a 36.14% increase over fiscal 2024’s reported figure.
 

Broadcom Inc. Price and Consensus

Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote

The consensus mark for Cisco’s fiscal 2025 earnings has increased by 1.6% to $3.79 per share over the past 30 days, suggesting 1.61% growth over fiscal 2024.
 

Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote

Both AVGO’s and CSCO’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. Cisco’s average surprise of 3.94% is slightly better than AVGO’s surprise of 3.2%, reflecting a good quality of earnings beat on a consistent basis.

Valuation: CSCO is Cheaper Than AVGO

Both Cisco and Broadcom are overvalued, as suggested by the Value Score of D. 

However, in terms of forward 12-month Price/Sales, Broadcom shares are trading at 17.48X, significantly higher than Cisco’s 4.38X.

CSCO and AVGO Valuation

AVGO Leads the Race on Stronger AI Push

Broadcom’s expanding AI portfolio, along with a rich partner base, including NVIDIA, Arista Networks, Alphabet, Dell Technologies, Meta Platform, Juniper and Supermicro, is a key catalyst. AVGO expects third-quarter fiscal 2025 AI revenues to jump 60% year over year to $5.1 billion on these factors. 

Cisco is not far off in terms of its AI push. The company is expanding its AI portfolio for data centers with new solutions like the Unified Nexus Dashboard, Cisco Intelligent Packet Flow, configurable AI PODs and 400G bidirectional optics.

However, Broadcom is slightly ahead due to strong demand for XPUs by hyperscalers. Cisco also faces a tough competitive environment in its core networking market compared with Broadcom.

Both Broadcom and Cisco currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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