Cisco (CSCO) stock down 9.3% YTD due to sluggish networking sales, but long-term prospects promising.

From Nasdaq: 2024-08-09 11:33:00

Cisco Systems (CSCO) shares have declined 9.3% year to date, underperforming the Computer & Technology sector. Sluggish networking sales are to blame, with stiff competition and lackluster demand from telecommunication and cable services providers. Cisco’s Q4 forecast is cloudy, with expectations of a year-over-year decline in revenues and earnings.

Despite the challenges, Cisco’s long-term prospects look promising, driven by innovation in the AI-driven networking space. The company has a strong portfolio with AI-related workload opportunities worth $950 billion. Additionally, partnerships with hyperscalers and acquisitions like Splunk are expected to boost growth in fiscal 2025.

Cisco’s strong partner base, including Microsoft, NVIDIA, Lenovo, and AT&T, is driving growth. Collaborations like the NVIDIA partnership for AI cluster solutions and the AT&T partnership for digital buying experiences are expanding Cisco’s market reach. Inventory destocking by July is expected to boost demand in fiscal 2025.

Even though Cisco’s stock is trading at a premium with a stretched valuation, the company’s expanding portfolio, cybersecurity initiatives, and partner collaborations are key catalysts for growth. With a Zacks Rank of #2 (Buy), Cisco’s prospects for fiscal 2025 look promising, despite the challenges the company currently faces. Cisco expects a low to mid-single-digit revenue growth in fiscal 2025.



Read more at Nasdaq: Can Cisco (CSCO) Stock Regain Momentum After 9.3% YTD Dip?