Cisco's Strong Growth in AI and Security Propels Shares Near 52-Week High

Cisco Systems (CSCO) shares closed at $69.27, slightly below its 52-week high of $69.78 on June 30. Year-to-date, CSCO shares have risen by 17%, outperforming the Computer & Technology sector and Extreme Networks (EXTR). The sector and EXTR shares have seen increases of 7% and 8.3% respectively.

Cisco’s aggressive push into AI and security has been driving growth, securing over $1 billion in AI infrastructure orders ahead of schedule in fiscal 2025. The company is expanding its AI portfolio with new solutions for data centers and collaborating with NVIDIA to offer AI-ready data center networks.

In fiscal 2025, Cisco expects revenues of $56.5-$56.7 billion and non-GAAP earnings of $3.77-$3.79 per share, up from previous guidance. The Zacks Consensus Estimate for revenues is $56.59 billion, indicating 5.18% growth year-over-year, with earnings expected to grow by 1.61%.

Cisco shares trade at a premium, with a Value Score of D and a forward 12-month price/sales ratio of 4.65X, higher than the industry average of 4.54X. Compared to Extreme Networks, CSCO shares are also trading at a premium.

While Cisco’s expanding portfolio and AI initiatives position it well for growth, macroeconomic challenges and competition in networking and security could impact its near-term prospects. Investors holding the stock should continue to do so, but a stretched valuation is a concern. Cisco currently carries a Zacks Rank #3 (Hold).

Read more at Nasdaq: Cisco Shares Trade Near 52-Week High: What’s Next for CSCO Investors?