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Cisco Systems Expands AI Portfolio; Revenue Growth Expected

Cisco Systems is expanding its AI portfolio with strong demand for its products. Revenue growth projects CSCO to surpass $1 billion in AI infrastructure orders in fiscal 2025, presenting a positive outlook despite a year-to-date stock decline.

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AI Rating:   7

Expansion of AI Infrastructure Orders
Cisco Systems (CSCO) is poised for growth as it expands its AI offerings, particularly in partnership with NVIDIA (NVDA). The company reported AI-driven infrastructure orders exceeding $700 million at the end of the first half of fiscal 2025, with expectations to surpass $1 billion by the fiscal year's end. This aggressive growth in AI-related orders is a significant positive indicator for investors, especially as Cisco continues to secure deals with enterprises for integrated systems that support AI applications.

Impressive Revenue Growth in Security Segment
In the second quarter of fiscal 2025, Cisco's security orders saw major growth, more than doubling compared to previous periods and hitting approximately $2.11 billion in revenue, a staggering year-over-year increase of 117%. Such performance reflects strong demand for Cisco’s advanced security solutions, which could bolster its overall revenue further.

EPS and Revenue Guidance
Cisco's guidance for fiscal 2025 forecasts revenues in the range of $56 to $56.5 billion, with earnings per share (EPS) expected to be between $3.68 and $3.74. This presents a positive outlook, although the slight year-over-year decline in EPS by 0.27% calls for cautious optimism among investors. Cisco’s ability to continually exceed earnings expectations, as noted in past results where it beat Zacks Consensus Estimate, further underscores a solid financial foundation.

Market Challenges
Despite the promising developments in AI and security segments, CSCO's shares have fallen by 6.2% year-to-date, attributed to ongoing macroeconomic challenges and heightened competition in the networking domain. Investors should be mindful of these external factors which could impact stock performance.

The report highlights Cisco's resilience and proactive strategies in emerging technologies; however, the stock trading below its 50-day moving average indicates potential bearish trends that could impact investor sentiment.

Stocks:  CSCO NVDA