Cisco Soars on AI Infrastructure Boom: Analysts Revise Targets After Record Quarter
Cisco Systems, Inc. (NASDAQ: CSCO) is riding a powerful wave of demand for artificial intelligence infrastructure, with its recent quarterly results and bullish outlook sending its stock toward levels not seen since the dot-com era. The company's strategic pivot to capitalize on the AI boom appears to be paying off handsomely.
On January 30, shares closed at $78.32. According to Yahoo Finance data, the stock trades at a trailing P/E of 26.79 and a forward P/E of 16.81, reflecting heightened expectations for future earnings growth. The catalyst was a first-quarter earnings report that smashed expectations, driven primarily by what CEO Chuck Robbins called "accelerating demand" from cloud giants racing to build out AI-optimized data centers.
The company designs and sells the networking hardware, security software, and silicon crucial for powering the modern internet and, increasingly, AI workloads. Following the November 13 earnings announcement, which showed record quarterly revenue, the stock surged roughly 7%. Management subsequently raised its full-year guidance, now projecting fiscal 2026 adjusted EPS of $4.08 to $4.14 and revenue between $60.2 billion and $61 billion.
"The numbers speak for themselves," said Michael Thorne, a technology portfolio manager at Horizon Capital. "Cisco is no longer just a legacy hardware play. The Splunk integration and their Silicon One chips are creating a full-stack platform that is essential for the AI era. This guidance raise signals confidence that this demand is structural, not a one-off."
The optimism was echoed across Wall Street. Bank of America lifted its price target to $95, while Rosenblatt Securities and Melius Research set a Street-high target of $100. UBS, Morgan Stanley, and KeyBanc also raised their targets. Goldman Sachs maintained its rating, citing the strong AI momentum.
However, not all observers are convinced. Sarah Chen, a senior analyst at a fiduciary investment firm, offered a more critical take: "Let's not get carried away. A single quarter of AI-driven growth doesn't erase years of stagnant performance. Their forward P/E is more reasonable, but this feels like a catch-up trade riding the AI hype. Execution on the Splunk deal is still a risk, and competition from Arista and others is fierce. This could be a peak."
David Park, an independent retail investor, shared a different perspective: "As a long-time shareholder, it's refreshing to see Cisco finally getting some love. The AI data center story is real, and they're at the heart of it. The raised guidance and chip milestone show they're executing. It might not be the flashiest AI stock, but it feels like a solid bet with less volatility."
The company also provided strong Q2 revenue guidance of $15 billion to $15.2 billion, ahead of consensus estimates. This performance underscores Cisco's evolving identity from a traditional networking vendor to a comprehensive software and infrastructure platform, a transformation bolstered by its $28 billion acquisition of Splunk.
Disclosure: None.