Cisco Systems (CSCO) stock has outperformed the Computer & Technology sector with a 7.7% return in the past 3 months, driven by aggressive AI push and growing security dominance. Hewlett Packard Enterprise (HPE) and Arista Networks (ANET) shares have dropped. Cisco’s premium valuation is justified by strong networking growth and expanding security footprint.

In the first quarter of fiscal 2026, Cisco reported $1.3 billion in AI infrastructure orders from hyperscalers and expects $3 billion in AI infrastructure revenues for the year. Total Annual Recurring Revenues reached $31.4 billion, with remaining performance obligations at $42.9 billion. Networking growth is expected to drive top-line growth in fiscal 2026.

Cisco anticipates strong demand for AI infrastructure and campus networking solutions, with networking product orders growing double digits for the fifth consecutive quarter. The company’s networking portfolio, powered by Silicon One, AI-native security solutions, and operating systems, is expanding its AI footprint. Cisco introduced the industry’s most optimized routing system in October, enhancing its AI capabilities.

Cisco offers positive guidance for the second quarter of fiscal 2026, expecting non-GAAP earnings between $1.01-$1.03 per share and revenues in the range of $15-$15.2 billion. For the full year, revenues are projected to be in the $60.2-$61 billion range, with non-GAAP earnings between $4.08-$4.14 per share. These forecasts indicate strong growth potential for Cisco in 2026.

With a Zacks Rank #2 (Buy), Cisco is well-positioned for sustained growth in the tech industry. The company’s AI push and security dominance are key drivers for its long-term prospects. The stock is expected to rally further, making it a compelling investment choice for investors looking for growth opportunities in the evolving tech landscape.

Read more at Nasdaq: Cisco Stock Rises 8% in 3 Months: Will the Rally Continue in 2026?