Cisco's Strong Portfolio Aids Product Revenues: A Sign of More Upside?

Cisco Systems CSCO is expanding its lead in network security and intelligent infrastructure through an innovative portfolio. In the third quarter of fiscal 2025, the company reported product revenues of $10.37 billion, up 15% year over year, and accounted for more than 73% of total revenues. This growth was led by a 54% surge in Security products, 24% growth in Observability, 8% in Networking and 4% in Collaboration.

The company’s product ARR rose 8%, reflecting the growing adoption of software-based offerings and signaling a successful shift toward a more predictable, margin-rich revenue model. This strong performance highlights Cisco’s ability to meet enterprise demand for secure, scalable and intelligent infrastructure solutions.

Cisco's latest innovation, AI Canvas, further accelerates this momentum. Positioned as a unified platform for AI-powered IT operations, it brings together real-time telemetry, intelligent automation and cross-domain collaboration in a shared interface. Integrated with Cisco's major platforms, including Meraki, ThousandEyes, Catalyst and Splunk, AI Canvas increases operational efficiency and shortens problem-solving cycles across NetOps, SecOps and DevOps.

Cisco is leveraging its collaboration with NVIDIA to strengthen its footprint in the AI infrastructure domain. It secured AI infrastructure orders worth more than $1 billion to date in fiscal 2025, a quarter ahead of schedule. These latest solutions are expected to drive further growth.

Fortinet & Juniper: Rising Threats to Cisco’s AI Edge

Fortinet FTNT and Juniper JNPR offer significant competition to Cisco’s growing AI footprint.

Fortinet is a formidable competitor to Cisco in AI-enhanced cybersecurity, with strengths in next-gen firewalls, Secure SD-WAN and SASE. With its unified FortiOS platform and AI-driven SecOps tools, Fortinet continues to challenge Cisco’s dominance in enterprise network security. Its deep experience and consistent delivery of mission-critical solutions support its growing share in the cybersecurity market.

Juniper excels in AI-powered networking, SDN and high-level routing, led by innovations like Mist AI and the Marvis virtual assistant. Juniper’s Junos OS, with open SDK support, streamlines large-scale configuration and enables AI-native automation. With ongoing investments in AI-native infrastructure, Juniper is emerging as a strong competitor to Cisco in cloud-managed networking and enterprise automation.

CSCO’s Price Performance, Valuation & Estimates

Shares of Cisco have gained 8.3% year to date compared with the Zacks Computer – Networking industry’s return of 8%.

From a valuation standpoint, CSCO appears overvalued, trading at a forward 12-month price-to-sales ratio of 4.31, higher than the industry’s 4.11. Cisco carries a Value Score of D.

The Zacks Consensus Estimate for CSCO’s fiscal 2025 revenues is pegged at $56.59 billion, indicating 5.18% year-over-year growth. The consensus mark for CSCO’s 2025 earnings is pegged at $3.79 per share, which increased 1.6% over the past 30 days. The earnings figure suggests 1.61% growth over the figure reported in fiscal 2024.
 

CSCO stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research