Cisco Systems is transforming to focus on software revenue and growth, with high execution risks.

From Yahoo Finance: 2025-05-21 11:27:00

Cisco Systems, Inc. (CSCO) is trading at $63.92 with a trailing P/E of 26.09 and a forward P/E of 16. The company is transitioning to a full-stack software and infrastructure platform for the AI and cloud era, with a focus on high-margin, recurring software revenue and growth in Annualized Recurring Revenue (ARR) and Remaining Performance Obligations (RPO).

The $28B Splunk acquisition is key to Cisco’s transformation, integrating observability and security tools and driving cross-sell opportunities. Strong balance sheet, shareholder returns, and reasonable valuation provide downside protection, but execution risks remain high. Cisco is investing in growth areas like cybersecurity and Industrial IoT to offset legacy headwinds and unlock shareholder value.

Though not among the 30 Most Popular Stocks Among Hedge Funds, 84 hedge fund portfolios held CSCO at the end of Q4. While CSCO offers potential, other AI stocks may deliver higher returns in a shorter timeframe. Those interested in a promising AI stock trading at less than 5 times earnings should explore other options.



Read more at Yahoo Finance: Cisco Systems, Inc. (CSCO): A Bull Case Theory