Cisco Systems (CSCO)
Market Price (5/30/2026): $120.48 | Market Cap: $476.1 BilSector: Information Technology | Industry: Communications Equipment
Cisco Systems (CSCO)
Market Price (5/30/2026): $120.48Market Cap: $476.1 BilSector: Information TechnologyIndustry: Communications Equipment
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 21%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 13 Bil, FCF LTM is 12 Bil Stock buyback supportStock Buyback 3Y Total is 21 Bil Low stock price volatilityVol 12M is 29% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cybersecurity, Cloud Computing, and 5G & Advanced Connectivity. Show more. | Trading close to highsDist 52W High is 0.0%, Dist 3Y High is 0.0% | Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 52% Key risksCSCO key risks include [1] market share erosion from intense competition in its core networking and cybersecurity businesses, Show more. |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 21%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 19%, CFO LTM is 13 Bil, FCF LTM is 12 Bil |
| Stock buyback supportStock Buyback 3Y Total is 21 Bil |
| Low stock price volatilityVol 12M is 29% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cybersecurity, Cloud Computing, and 5G & Advanced Connectivity. Show more. |
| Trading close to highsDist 52W High is 0.0%, Dist 3Y High is 0.0% |
| Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 52% |
| Key risksCSCO key risks include [1] market share erosion from intense competition in its core networking and cybersecurity businesses, Show more. |
Qualitative Assessment
AI Analysis | Feedback
Cisco Systems (CSCO) stock has gained about 55% since 1/31/2026 because of the following key factors:
1. Consistent Earnings Beats and Upbeat Guidance, Particularly for AI-Related Orders.
Cisco delivered strong financial results, consistently beating analyst expectations for both revenue and earnings per share in its Q2 and Q3 fiscal year 2026 reports. For Q2 FY26 (reported February 11, 2026), Cisco reported record revenue of $15.3 billion, a 10% year-over-year increase, and non-GAAP EPS of $1.04, up 11% year-over-year, both exceeding consensus estimates. Following the Q3 FY26 report (May 13, 2026), the company again posted record revenue of $15.8 billion, up 12% year-over-year, and non-GAAP EPS of $1.06, topping estimates. Crucially, Cisco significantly raised its full fiscal year 2026 AI order expectations from $5 billion to approximately $9 billion and increased its FY26 revenue guidance to $62.8 billion-$63.0 billion and non-GAAP EPS to $4.27-$4.29. These upward revisions signaled strong future growth prospects to investors.
2. Surging Demand for AI Infrastructure and Networking Solutions.
A core driver of Cisco's stock surge has been the accelerating demand for its AI infrastructure and campus networking solutions. The networking segment experienced significant growth, with product orders increasing 18% year-over-year in Q2 FY26. By Q3 FY26, total product orders surged 35% year-over-year. AI infrastructure orders from hyperscalers were a particular highlight, totaling $2.1 billion in Q2 FY26 and $1.9 billion in Q3 FY26, demonstrating substantial acceleration in this key growth area. Cisco's CEO affirmed the company's strong positioning as a "critical infrastructure for the AI era."
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Stock Movement Drivers
Fundamental Drivers
The 54.6% change in CSCO stock from 1/31/2026 to 5/29/2026 was primarily driven by a 33.4% change in the company's P/E Multiple.| (LTM values as of) | 1312026 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 77.90 | 120.42 | 54.6% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 57,696 | 60,746 | 5.3% |
| Net Income Margin (%) | 17.9% | 19.7% | 10.0% |
| P/E Multiple | 29.8 | 39.8 | 33.4% |
| Shares Outstanding (Mil) | 3,956 | 3,952 | 0.1% |
| Cumulative Contribution | 54.6% |
Market Drivers
1/31/2026 to 5/29/2026| Return | Correlation | |
|---|---|---|
| CSCO | 54.6% | |
| Market (SPY) | 9.6% | 34.2% |
| Sector (XLK) | 32.9% | 36.1% |
Fundamental Drivers
The 66.5% change in CSCO stock from 10/31/2025 to 5/29/2026 was primarily driven by a 41.4% change in the company's P/E Multiple.| (LTM values as of) | 10312025 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 72.33 | 120.42 | 66.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 56,654 | 60,746 | 7.2% |
| Net Income Margin (%) | 18.0% | 19.7% | 9.6% |
| P/E Multiple | 28.1 | 39.8 | 41.4% |
| Shares Outstanding (Mil) | 3,961 | 3,952 | 0.2% |
| Cumulative Contribution | 66.5% |
Market Drivers
10/31/2025 to 5/29/2026| Return | Correlation | |
|---|---|---|
| CSCO | 66.5% | |
| Market (SPY) | 11.5% | 35.8% |
| Sector (XLK) | 27.4% | 40.2% |
Fundamental Drivers
The 113.4% change in CSCO stock from 4/30/2025 to 5/29/2026 was primarily driven by a 62.7% change in the company's P/E Multiple.| (LTM values as of) | 4302025 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 56.43 | 120.42 | 113.4% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 54,176 | 60,746 | 12.1% |
| Net Income Margin (%) | 17.0% | 19.7% | 16.1% |
| P/E Multiple | 24.5 | 39.8 | 62.7% |
| Shares Outstanding (Mil) | 3,981 | 3,952 | 0.7% |
| Cumulative Contribution | 113.4% |
Market Drivers
4/30/2025 to 5/29/2026| Return | Correlation | |
|---|---|---|
| CSCO | 113.4% | |
| Market (SPY) | 38.0% | 39.3% |
| Sector (XLK) | 83.0% | 42.0% |
Fundamental Drivers
The 176.9% change in CSCO stock from 4/30/2023 to 5/29/2026 was primarily driven by a 152.1% change in the company's P/E Multiple.| (LTM values as of) | 4302023 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 43.49 | 120.42 | 176.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 53,161 | 60,746 | 14.3% |
| Net Income Margin (%) | 21.3% | 19.7% | -7.4% |
| P/E Multiple | 15.8 | 39.8 | 152.1% |
| Shares Outstanding (Mil) | 4,103 | 3,952 | 3.8% |
| Cumulative Contribution | 176.9% |
Market Drivers
4/30/2023 to 5/29/2026| Return | Correlation | |
|---|---|---|
| CSCO | 176.9% | |
| Market (SPY) | 89.0% | 51.6% |
| Sector (XLK) | 158.6% | 48.9% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| CSCO Return | 46% | -22% | 9% | 21% | 33% | 56% | 211% |
| Peers Return | 77% | -19% | 66% | 51% | 6% | 67% | 538% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 10% | 101% |
Monthly Win Rates [3] | |||||||
| CSCO Win Rate | 75% | 33% | 58% | 67% | 67% | 80% | |
| Peers Win Rate | 73% | 42% | 65% | 65% | 60% | 64% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 60% | |
Max Drawdowns [4] | |||||||
| CSCO Max Drawdown | -10% | -36% | -17% | -13% | -17% | -14% | |
| Peers Max Drawdown | -17% | -36% | -23% | -30% | -41% | -19% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: HPE, ANET, DELL, PANW, FTNT. See CSCO Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 5/29/2026 (YTD)
How Low Can It Go
| Event | CSCO | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -17.4% | -18.8% |
| % Gain to Breakeven | 21.1% | 23.1% |
| Time to Breakeven | 58 days | 79 days |
| Summer-Fall 2023 Five Percent Yield Shock | ||
| % Loss | -10.4% | -9.5% |
| % Gain to Breakeven | 11.6% | 10.5% |
| Time to Breakeven | 289 days | 24 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -35.9% | -24.5% |
| % Gain to Breakeven | 55.9% | 32.4% |
| Time to Breakeven | 756 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -28.3% | -33.7% |
| % Gain to Breakeven | 39.4% | 50.9% |
| Time to Breakeven | 76 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -17.5% | -19.2% |
| % Gain to Breakeven | 21.2% | 23.8% |
| Time to Breakeven | 53 days | 105 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -20.7% | -12.2% |
| % Gain to Breakeven | 26.0% | 13.9% |
| Time to Breakeven | 49 days | 62 days |
In The Past
Cisco Systems's stock fell -17.4% during the 2025 US Tariff Shock. Such a loss loss requires a 21.1% gain to breakeven.
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Asset Allocation
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| Event | CSCO | S&P 500 |
|---|---|---|
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -35.9% | -24.5% |
| % Gain to Breakeven | 55.9% | 32.4% |
| Time to Breakeven | 756 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -28.3% | -33.7% |
| % Gain to Breakeven | 39.4% | 50.9% |
| Time to Breakeven | 76 days | 140 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -20.7% | -12.2% |
| % Gain to Breakeven | 26.0% | 13.9% |
| Time to Breakeven | 49 days | 62 days |
| 2010 Eurozone Sovereign Debt Crisis / Flash Crash | ||
| % Loss | -23.4% | -15.4% |
| % Gain to Breakeven | 30.5% | 18.2% |
| Time to Breakeven | 1127 days | 125 days |
| 2008-2009 Global Financial Crisis | ||
| % Loss | -52.0% | -53.4% |
| % Gain to Breakeven | 108.4% | 114.4% |
| Time to Breakeven | 2076 days | 1085 days |
In The Past
Cisco Systems's stock fell -17.4% during the 2025 US Tariff Shock. Such a loss loss requires a 21.1% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About Cisco Systems (CSCO)
AI Analysis | Feedback
- The IBM for business networking and digital infrastructure.
- The General Electric for the foundational technology of the internet and enterprise networks.
AI Analysis | Feedback
- Networking Hardware: Cisco provides a full range of networking hardware, including switches, routers, wireless access points, and data center infrastructure, essential for building and maintaining digital networks.
- Collaboration Solutions: These products facilitate communication and teamwork, encompassing unified communications, TelePresence for high-definition video conferencing, and general conferencing platforms.
- Security Solutions: Cisco offers comprehensive security products to protect networks, cloud environments, email, and user identities from a wide array of cyber threats.
- Internet of Things (IoT) & Analytics Software: This category includes software for connecting and managing IoT devices, alongside advanced tools for data analysis and insights.
- Technical Support & Advanced Services: Cisco provides various service and support options, from essential technical assistance to specialized advanced services, ensuring customer success and operational efficiency.
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Major Suppliers:
- Foxconn (Hon Hai Precision Industry Co., Ltd.) (TPE: 2317)
- Jabil Inc. (NYSE: JBL)
- Flex Ltd. (NASDAQ: FLEX)
- Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
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Chuck Robbins, Chair and Chief Executive Officer
Chuck Robbins joined Cisco in 1997 and has served as CEO since July 2015, also becoming Chairman of the Board in December 2017. He has been instrumental in leading Cisco's strategic shift towards software, services, and innovative technologies. Prior to his CEO role, Robbins held various leadership positions within the company, including Senior Vice President of Worldwide Field Operations, where he oversaw global sales and partner organizations, and Senior Vice President of the Americas. Before joining Cisco, he worked as an application developer for North Carolina National Bank and held positions at Wellfleet Communications and Ascend Communications.
Mark Patterson, Executive Vice President and Chief Financial Officer
Mark Patterson became Cisco's Executive Vice President and Chief Financial Officer effective July 27, 2025, succeeding Scott Herren. He joined Cisco in September 2000 and has held various leadership roles within the company, including Executive Vice President and Chief Strategy Officer since March 2024. Patterson also served as Senior Vice President, Chief of Staff to the Chair & CEO, and Senior Vice President, Strategy, Planning, and Operations for Worldwide Sales and Marketing. Before his tenure at Cisco, he led finance and operations for IPMobile, a company that was later acquired by Cisco in 2000.
Jeetu Patel, President and Chief Product Officer
Jeetu Patel leads Cisco's global product vision and strategy. He joined Cisco in 2020 and initially led the collaboration and security business. Patel is recognized for his dedication to product design, user experience, and for driving innovation across Cisco's extensive product portfolio, establishing the company's role as critical infrastructure for the AI era.
Dev Stahlkopf, Executive Vice President and Chief Legal Officer
Dev Stahlkopf serves as Cisco's Executive Vice President and Chief Legal Officer.
Thimaya Subaiya, Executive Vice President, Operations
Thimaya Subaiya is Cisco's Executive Vice President of Operations, overseeing key functions such as Security & Trust, Supply Chain, IT, internal Cisco AI governance, and core operations. He is known for his strong background in implementing growth strategies within the services and software businesses, balancing innovation, simplicity, and optimization.
AI Analysis | Feedback
The key risks to Cisco Systems (CSCO) include intensifying competition in the AI networking sector, ongoing margin pressures from rising costs and product mix, and challenges in effectively integrating strategic acquisitions.
- Intensifying Competition in AI Networking: Cisco faces significant competitive pressures, particularly in the rapidly evolving AI networking sector. Rivals such as Arista Networks and Nvidia are actively gaining market share in data center AI networking, leading to a decline in Cisco's core network revenue. This fierce competition poses a substantial threat to Cisco's market position and long-term revenue growth.
- Margin Pressures from Rising Costs and Product Mix: The company is experiencing declining gross margins, primarily due to increases in memory chip prices and a product mix that is more hardware-heavy. These rising costs directly impact Cisco's profitability and have led to weaker-than-expected profitability forecasts, causing investor concern and stock volatility.
- Challenges in Integrating Acquisitions: Cisco's aggressive acquisition strategy, including the recent $28 billion acquisition of Splunk, presents integration challenges. These challenges can include potential cultural clashes, talent drain, and a slower-than-anticipated return on investment. Furthermore, a rapid succession of acquisitions may stretch the company into areas where it lacks a solid competitive advantage, leading to operational complexities.
AI Analysis | Feedback
The clear emerging threats for Cisco Systems include:
- The accelerating industry shift towards **Secure Access Service Edge (SASE)** architectures, which converge network and security functions into a single, cloud-delivered platform. This fundamentally challenges Cisco's traditional model of selling distinct on-premises networking and security hardware and software appliances, as pure-play SASE providers and other integrated security vendors gain market share.
- The increasing maturity and comprehensive nature of **hyperscale public cloud providers (e.g., Amazon Web Services, Microsoft Azure, Google Cloud)**. As more enterprises migrate their core infrastructure and applications to these cloud environments, the native networking, security, and collaboration services offered by the cloud providers reduce the need for traditional enterprise-purchased hardware and software from vendors like Cisco.
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Cisco Systems, Inc. (CSCO) operates within several large and expanding addressable markets for its diverse range of products and services.
Overall Addressable Market
- Cisco aims for a total addressable market (TAM) of approximately $900 billion by 2025, encompassing its existing, expansion, and adjacent markets globally. As of September 2021, the company addressed a market worth nearly $260 billion, with a goal to increase this to around $400 billion by 2025 in existing and expansion markets.
Infrastructure Platforms
- Managed Network Services: The global managed network services market was valued at USD 75.69 billion in 2024 and is projected to reach USD 150.28 billion by 2032. North America is a dominant region, expected to hold the largest market share (approximately 35.22%) in this sector. Another estimate places the global market at USD 235.94 billion in 2024, growing to USD 541.32 billion by 2035. Cisco itself forecasts its total addressable market for managed services to be $113 billion by 2025.
- Routers and Switches: Cisco's market for routers and switches is estimated to reach USD 32.1 billion globally in 2026 and is projected to surpass USD 49.7 billion by 2032.
Collaboration Products
- Unified Communications (UC): The global unified communications market size was estimated at USD 136.11 billion in 2023 and is projected to reach USD 417.86 billion by 2030. North America accounted for 26.0% of the global unified communications market in 2023.
- Video Conferencing: The global video conferencing market size was estimated at USD 11.65 billion in 2024 and is projected to reach USD 24.46 billion by 2033. North America held the largest revenue share of over 38% in this market in 2024.
- Internet of Things (IoT) Solutions: The global Internet of Things (IoT) market size was valued at USD 1.18 trillion in 2023 and is projected to reach USD 2.65 trillion by 2030. North America held the largest market revenue share, accounting for 36.1% in 2023. More specifically, the global IoT Software market was valued at USD 1.2 billion in 2024 and is expected to reach nearly USD 3.28 billion by 2032.
Security Products
- Network Security: The global network security market size was valued at USD 27.11 billion in 2024 and is projected to reach USD 79.29 billion by 2033. North America held 35.9% of the global network security market's revenue share in 2024.
- Cloud Security: The global cloud security market size was estimated at USD 40.81 billion in 2025 and is predicted to increase to approximately USD 133.39 billion by 2035. North America dominated the market with the largest revenue share of 35% in 2025.
- Identity and Access Management (IAM): The global identity and access management market size was valued at USD 18.86 billion in 2024 and is projected to reach USD 61.93 billion by 2033. North America is identified as the dominant region in this market.
- Advanced Threat Protection (ATP): The global advanced threat protection market size was estimated at USD 6.79 billion in 2023 and is projected to reach USD 24.51 billion by 2030. North America was the largest revenue-generating market in 2023.
AI Analysis | Feedback
Cisco Systems (CSCO) is anticipated to drive future revenue growth over the next 2-3 years through several key areas:
- AI Infrastructure Demand: Cisco is experiencing significant demand for network equipment as companies globally expand their data centers and accelerate Artificial Intelligence (AI) projects. The company has secured substantial AI-related orders, with expectations to recognize approximately $3 billion in revenue from AI infrastructure in fiscal year 2026, primarily from hyperscalers. This growth is further fueled by the need for high-speed network technology among government clouds, commercial cloud providers, and large enterprises as AI workloads generate substantially more network traffic.
- Growth in Security Business and Splunk Integration: The acquisition of Splunk is a pivotal driver for Cisco's security revenues. The integration of Splunk is expected to significantly strengthen Cisco's Threat Intelligence, Detection, and Response (TIDR) offerings. While there have been short-term impacts from the shift to cloud subscriptions for Splunk, which affects revenue recognition, the long-term outlook for the combined security portfolio, including new AI-powered solutions like Hypershield, is positive.
- Campus Networking Refresh Cycle: Cisco is poised to benefit from a multi-year, multi-billion-dollar campus network refresh opportunity. Enterprise customers are increasingly investing in modernizing their campus networks, upgrading switching, routing, and wireless products to support AI deployments and replace older infrastructure. This cycle is expected to drive demand for Cisco's Catalyst 9000 series switches and other refreshed networking products.
- Increasing Adoption of Software and Subscription-based Offerings: Cisco continues its strategic shift towards a higher mix of software and subscription revenues, which provides a more predictable and recurring revenue stream. This focus on Annual Recurring Revenue (ARR) and software growth enhances the stability and long-term visibility of Cisco's financial performance, supporting growth across its product categories.
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Share Repurchases
- In February 2025, Cisco's board approved a $15 billion increase to its stock repurchase program, bringing the total authorized amount for future repurchases to approximately $17 billion.
- Cisco returned $12.4 billion to stockholders in fiscal year 2025 through dividends and share repurchases, with $6 billion specifically allocated for share repurchases.
- In the fourth quarter of fiscal year 2025, the company repurchased approximately 19 million shares for an aggregate purchase price of $1.3 billion.
Share Issuance
- In December 2025, Cisco's shareholders approved an amendment to the 2005 Stock Incentive Plan, increasing the number of shares authorized for issuance by 57,490,000.
- As of July 26, 2025, prior to the approved increase, 100,026,176 shares were available for future grants under the stock incentive plan.
Outbound Investments
- In September 2023, Cisco announced its most significant acquisition, Splunk, for approximately $28 billion.
- The company completed the acquisition of Acacia Communications for $4.5 billion in March 2021, focusing on optical component technology for high-speed data transmission.
- Cisco has made strategic acquisitions in AI and security, including EzDubs and NeuralFabric in November 2025, and SnapAttack in February 2025. It also launched a $1 billion Global AI fund in 2024.
Capital Expenditures
- Cisco's capital expenditures were $905 million in fiscal year 2025, $670 million in fiscal year 2024, and $849 million in fiscal year 2023.
- The company expects to surpass $1 billion in AI infrastructure orders in fiscal year 2025, indicating a significant focus on AI-driven network infrastructure and data capacity investments.
- Cisco's CEO indicated plans to boost capital expenditures in the upcoming six months (as of March 2026), with a continued focus on AI infrastructure.
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| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 04302026 | PLTR | Palantir Technologies | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.0% | 0.0% | 0.0% |
| 04102026 | ADSK | Autodesk | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 8.5% | 8.5% | 0.0% |
| 04102026 | BSY | Bentley Systems | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 4.2% | 4.2% | 0.0% |
| 04102026 | ENPH | Enphase Energy | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 5.7% | 5.7% | 0.0% |
| 04102026 | BL | BlackLine | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 3.2% | 3.2% | -3.0% |
| 09302022 | CSCO | Cisco Systems | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 33.0% | 38.8% | -0.9% |
| 10312020 | CSCO | Cisco Systems | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 44.0% | 60.5% | 0.0% |
Research & Analysis
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 148.72 |
| Mkt Cap | 199.4 |
| Rev LTM | 22,818 |
| Op Inc LTM | 3,183 |
| FCF LTM | 4,422 |
| FCF 3Y Avg | 3,436 |
| CFO LTM | 4,955 |
| CFO 3Y Avg | 4,188 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 15.6% |
| Rev Chg 3Y Avg | 10.9% |
| Rev Chg Q | 19.3% |
| QoQ Delta Rev Chg LTM | 4.4% |
| Op Inc Chg LTM | 24.1% |
| Op Inc Chg 3Y Avg | 20.3% |
| Op Mgn LTM | 19.0% |
| Op Mgn 3Y Avg | 17.6% |
| QoQ Delta Op Mgn LTM | 0.3% |
| CFO/Rev LTM | 30.4% |
| CFO/Rev 3Y Avg | 30.9% |
| FCF/Rev LTM | 26.8% |
| FCF/Rev 3Y Avg | 27.4% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 199.4 |
| P/S | 11.1 |
| P/Op Inc | 39.9 |
| P/EBIT | 37.6 |
| P/E | 49.5 |
| P/CFO | 36.4 |
| Total Yield | 1.9% |
| Dividend Yield | 0.3% |
| FCF Yield 3Y Avg | 4.2% |
| D/E | 0.0 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 53.6% |
| 3M Rtn | 81.9% |
| 6M Rtn | 64.1% |
| 12M Rtn | 90.0% |
| 3Y Rtn | 183.0% |
| 1M Excs Rtn | 47.4% |
| 3M Excs Rtn | 71.7% |
| 6M Excs Rtn | 53.0% |
| 12M Excs Rtn | 54.5% |
| 3Y Excs Rtn | 128.0% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Networking | 29,229 | 34,570 | |||
| Services | 14,550 | 13,856 | 13,539 | 13,804 | 13,323 |
| Security | 5,075 | 3,859 | 3,158 | ||
| Collaboration | 4,113 | 4,052 | 4,472 | 4,727 | |
| Observability | 837 | 661 | |||
| End-to-End Security | 3,699 | 3,382 | |||
| Internet for the Future | 5,276 | 4,514 | |||
| Optimized Application Experiences | 729 | 654 | |||
| Other Products | 11 | 15 | 33 | ||
| Secure, Agile Networks | 23,831 | 22,722 | |||
| Applications | 5,568 | ||||
| Infrastructure Platforms | 27,219 | ||||
| Total | 53,804 | 56,998 | 51,557 | 49,818 | 49,301 |
Price Behavior
| Market Price | $120.42 | |
| Market Cap ($ Bil) | 476.3 | |
| First Trading Date | 03/26/1990 | |
| Distance from 52W High | 0.0% | |
| 50 Days | 200 Days | |
| DMA Price | $93.11 | $78.28 |
| DMA Trend | up | up |
| Distance from DMA | 29.3% | 53.8% |
| 3M | 1YR | |
| Volatility | 38.2% | 29.5% |
| Downside Capture | -1.40 | 74.75 |
| Upside Capture | 154.85 | 131.11 |
| Correlation (SPY) | 26.8% | 38.7% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.33 | 0.63 | 1.01 | 0.90 | 0.91 | 0.82 |
| Up Beta | 0.52 | 0.51 | 0.44 | 0.43 | 0.67 | 0.76 |
| Down Beta | -3.81 | 1.07 | 1.76 | 1.26 | 1.05 | 0.94 |
| Up Capture | 88% | 83% | 129% | 126% | 117% | 63% |
| Bmk +ve Days | 15 | 22 | 31 | 66 | 141 | 428 |
| Stock +ve Days | 16 | 27 | 39 | 72 | 140 | 416 |
| Down Capture | -109% | 32% | 89% | 79% | 88% | 90% |
| Bmk -ve Days | 4 | 18 | 30 | 56 | 108 | 321 |
| Stock -ve Days | 6 | 16 | 24 | 51 | 110 | 330 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CSCO | |
|---|---|---|---|---|
| CSCO | 95.0% | 29.4% | 2.27 | - |
| Sector ETF (XLK) | 66.5% | 20.7% | 2.36 | 41.6% |
| Equity (SPY) | 30.3% | 11.8% | 1.94 | 38.3% |
| Gold (GLD) | 37.5% | 26.7% | 1.17 | 5.0% |
| Commodities (DBC) | 39.6% | 18.8% | 1.63 | 1.1% |
| Real Estate (VNQ) | 12.5% | 13.1% | 0.64 | 1.7% |
| Bitcoin (BTCUSD) | -31.8% | 41.6% | -0.81 | 18.4% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CSCO | |
|---|---|---|---|---|
| CSCO | 21.5% | 24.5% | 0.77 | - |
| Sector ETF (XLK) | 23.9% | 24.8% | 0.84 | 54.7% |
| Equity (SPY) | 14.3% | 17.0% | 0.66 | 57.9% |
| Gold (GLD) | 18.8% | 18.0% | 0.85 | 6.1% |
| Commodities (DBC) | 10.2% | 19.4% | 0.41 | 13.6% |
| Real Estate (VNQ) | 3.4% | 18.8% | 0.08 | 39.2% |
| Bitcoin (BTCUSD) | 14.6% | 54.6% | 0.46 | 18.6% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CSCO | |
|---|---|---|---|---|
| CSCO | 19.4% | 25.7% | 0.71 | - |
| Sector ETF (XLK) | 26.0% | 24.5% | 0.95 | 64.7% |
| Equity (SPY) | 15.9% | 17.9% | 0.76 | 67.6% |
| Gold (GLD) | 13.3% | 16.0% | 0.69 | 2.6% |
| Commodities (DBC) | 7.3% | 17.9% | 0.33 | 21.2% |
| Real Estate (VNQ) | 5.7% | 20.7% | 0.24 | 46.1% |
| Bitcoin (BTCUSD) | 67.0% | 66.9% | 1.06 | 14.8% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Updated N/A/N/A/N/A| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 5/13/2026 | 13.4% | 12.3% | |
| 2/11/2026 | -12.3% | -8.2% | -8.4% |
| 11/12/2025 | 4.6% | 6.0% | 5.8% |
| 8/13/2025 | -1.6% | -4.7% | -5.5% |
| 5/14/2025 | 4.8% | 3.1% | 4.6% |
| 2/12/2025 | 2.1% | 3.4% | -3.2% |
| 11/13/2024 | -2.1% | -2.8% | -0.9% |
| 8/14/2024 | 6.8% | 11.0% | 9.6% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 15 | 15 | 13 |
| # Negative | 10 | 10 | 11 |
| Median Positive | 4.6% | 5.7% | 5.8% |
| Median Negative | -4.1% | -4.7% | -6.4% |
| Max Positive | 13.4% | 12.3% | 14.4% |
| Max Negative | -13.7% | -13.0% | -17.1% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 04/30/2026 | 05/19/2026 | 10-Q |
| 01/31/2026 | 02/17/2026 | 10-Q |
| 10/31/2025 | 11/18/2025 | 10-Q |
| 07/31/2025 | 09/03/2025 | 10-K |
| 04/30/2025 | 05/20/2025 | 10-Q |
| 01/31/2025 | 02/18/2025 | 10-Q |
| 10/31/2024 | 11/19/2024 | 10-Q |
| 07/31/2024 | 09/05/2024 | 10-K |
| 04/30/2024 | 05/21/2024 | 10-Q |
| 01/31/2024 | 02/20/2024 | 10-Q |
| 10/31/2023 | 11/21/2023 | 10-Q |
| 07/31/2023 | 09/07/2023 | 10-K |
| 04/30/2023 | 05/24/2023 | 10-Q |
| 01/31/2023 | 02/21/2023 | 10-Q |
| 10/31/2022 | 11/22/2022 | 10-Q |
| 07/31/2022 | 09/08/2022 | 10-K |
Recent Forward Guidance
Updated 3/29/2026Latest: Q2 2026 Earnings Reported 2/11/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q3 2026 Revenue | 15.40 Bil | 15.50 Bil | 15.60 Bil | 2.6% | Raised | Guidance: 15.10 Bil for Q2 2026 | |
| Q3 2026 Non-GAAP Gross Margin | 65.5% | 66.0% | 66.5% | -2.9% | -2.0% | Lowered | Guidance: 68.0% for Q2 2026 |
| Q3 2026 Non-GAAP Operating Margin | 33.5% | 34.0% | 34.5% | 0 | 0 | Affirmed | Guidance: 34.0% for Q2 2026 |
| Q3 2026 Non-GAAP EPS | 1.02 | 1.03 | 1.04 | 1.0% | Raised | Guidance: 1.02 for Q2 2026 | |
| Q3 2026 GAAP EPS | 0.73 | 0.75 | 0.77 | 4.9% | Raised | Guidance: 0.71 for Q2 2026 | |
| 2026 Revenue | 61.20 Bil | 61.45 Bil | 61.70 Bil | 1.4% | Raised | Guidance: 60.60 Bil for 2026 | |
| 2026 Non-GAAP EPS | 4.13 | 4.15 | 4.17 | 1.0% | Raised | Guidance: 4.11 for 2026 | |
| 2026 GAAP EPS | 3 | 3.04 | 3.08 | 3.9% | Raised | Guidance: 2.92 for 2026 | |
Prior: Q1 2026 Earnings Reported 11/12/2025
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q2 2026 Revenue | 15.00 Bil | 15.10 Bil | 15.20 Bil | 2.4% | Raised | Guidance: 14.75 Bil for Q1 2026 | |
| Q2 2026 Non-GAAP Gross Margin | 67.5% | 68.0% | 68.5% | 0 | 0 | Affirmed | Guidance: 68.0% for Q1 2026 |
| Q2 2026 Non-GAAP Operating Margin | 33.5% | 34.0% | 34.5% | 1.5% | 0.5% | Raised | Guidance: 33.5% for Q1 2026 |
| Q2 2026 Non-GAAP EPS | 1.01 | 1.02 | 1.03 | 4.1% | Raised | Guidance: 0.98 for Q1 2026 | |
| Q2 2026 GAAP EPS | 0.69 | 0.71 | 0.74 | 9.2% | Raised | Guidance: 0.66 for Q1 2026 | |
| 2026 Revenue | 60.20 Bil | 60.60 Bil | 61.00 Bil | 1.8% | Raised | Guidance: 59.50 Bil for 2026 | |
| 2026 Non-GAAP EPS | 4.08 | 4.11 | 4.14 | 2.0% | Raised | Guidance: 4.03 for 2026 | |
| 2026 GAAP EPS | 2.87 | 2.92 | 2.98 | 2.6% | Raised | Guidance: 2.85 for 2026 | |
Insider Activity
Updated 5/27/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Robbins, Charles | Chair and CEO | Direct | Sell | 5272026 | 120.03 | 21,400 | 2,568,584 | 76,467,557 | Form |
| 2 | Tuszik, Oliver | EVP, Global Sales | Direct | Sell | 5192026 | 114.61 | 2,761 | 316,438 | 20,730,293 | Form |
| 3 | Stahlkopf, Deborah L | EVP and Chief Legal Officer | Direct | Sell | 5192026 | 117.31 | 6,586 | 772,580 | 20,789,396 | Form |
| 4 | Patterson, Mark | EVP and CFO | Direct | Sell | 5192026 | 117.29 | 5,512 | 646,485 | 22,438,478 | Form |
| 5 | Patel, Jeetendra I | President and CPO | Direct | Sell | 5192026 | 117.28 | 7,169 | 840,781 | 28,937,374 | Form |
CSCO Trade Sentinel
UNDERWEIGHT (Score 3-4)
CONVICTION RATIONALE
The final score is a 4 (UNDERWEIGHT). While the company benefits from a powerful near-term AI cyclical tailwind (strong sector trend), this is offset by a speculative valuation that already prices in much of this good news. The unfavorable risk-reward skew, combined with a 'CONTESTED' competitive moat and a faltering software transition (stagnant RPO), suggests the stock is more likely to underperform if any part of the bull narrative falters.
STOCK ARCHETYPE
Type C: 'Cyclical Opportunity' (Primary) / Type B: 'Quality Compounder / Stalwart' (Secondary)The stock's current momentum is overwhelmingly driven by a secular AI hardware cycle (70% weighting), characteristic of a 'Secular Cyclical'. Its long-term investment case, however, relies on its established market position, cash flows, and transition to recurring revenue, which are traits of a 'Quality Compounder' (30% weighting).
INVESTMENT THESIS
The primary driver for the stock is the accelerating demand for its high-performance networking hardware (Silicon One, Nexus series) from hyperscale cloud providers and enterprises building out AI infrastructure. This cyclical super-cycle provides a significant revenue and earnings tailwind.
- AI infrastructure orders from hyperscalers reached $2.1 billion in Q2 FY2026, a significant acceleration.
- Management raised guidance to exceed $5 billion in total AI orders for the full fiscal year 2026.
- The core Networking segment grew 21% YoY in Q2 FY2026, demonstrating strong momentum.
- Total product orders accelerated to 18% growth in Q2 FY2026, driven by a 65% surge from cloud customers.
PRIMARY RISK
The biggest friction is the significant lag between the booming AI-driven hardware sales and the much slower growth in contracted future software/subscription revenue, as measured by Remaining Performance Obligations (RPO). This suggests the company is not effectively converting the cyclical hardware boom into a durable, high-margin recurring revenue stream, posing a risk to its long-term valuation multiple.
- Total RPO growth decelerated to 5% YoY in Q2 FY2026, lagging far behind the 10% total revenue growth.
- Product RPO grew only 8% in the last quarter, a 600 basis point negative spread compared to the 14% growth in product revenue, indicating the backlog is not keeping pace.
- The Security segment, a key pillar of the software strategy, saw revenue decline by 4% YoY in Q2 FY2026.
| KPI | Threshold | Rationale |
|---|---|---|
| Product Order Growth | >15% YoY | This is the primary leading indicator for the AI-driven hardware cycle. A deceleration below this level would signal the peak of the cycle is approaching. |
| Total RPO Growth | Accelerating to >7% YoY | This KPI is critical to validating the software transition thesis. The growth rate must accelerate and begin to catch up with revenue growth to justify a higher valuation multiple. |
| Security Segment Revenue Growth | Return to Positive Growth | As a key designated growth and software market, a return to positive territory is essential to prove the company can execute on its diversification and cross-selling strategy with Splunk. |
AI Revenue Growth vs. Profitability Erosion
BULL VIEW
Powerful AI and campus refresh cycles are driving durable, double-digit revenue acceleration. Margin pressure is temporary and will be offset by operating leverage and price increases.
CORE TENSION
Can strong AI-driven revenue growth overcome significant gross margin compression from component costs and product mix, or is Cisco experiencing 'profitless prosperity'?
PREVAILING SENTIMENT
Q3 FY26 non-GAAP gross margin guided down to 65.5%-66.5% from 67.5% in Q2, explicitly due to higher memory costs and negative product mix.
BEAR VIEW
Margin guidance cuts and decelerating forward-looking metrics (ARR/RPO) prove the AI-driven growth is low-quality, cannot be monetized effectively, and lacks pricing power.
| Timeline | Event & Metric To Watch |
|---|---|
Mid-May 2026 | FY26 Q3 Earnings Call Watch: Non-GAAP Gross Margin must stabilize above 66.0%. Sequential growth in AI-related orders. |
Anytime (Next 6 months) | Hyperscaler AI Fabric Choice Watch: Announcements from Amazon, Google, or Microsoft regarding adoption of Nvidia's Spectrum-X Ethernet. |
Feb 12, 2026 & May 2026 | Arista Networks (ANET) Earnings Report Watch: ANET's data center revenue growth and commentary on hyperscaler demand and enterprise spending. |
Next 6 Months | Industry IT Spending Forecasts Watch: Gartner or Dell'Oro reports on enterprise IT capex trends, specifically outside of AI budgets. |
| Date | Event | Stock Impact |
|---|---|---|
Aug 12, 2025 - Feb 12, 2026 | Insider Selling Cluster Details: Over the preceding 6 months, insiders executed 47 open market sales, including the CEO, with zero open market purchases, signaling potential lack of internal conviction. | - |
Aug 15, 2025 | Q4 FY25 Earnings and Guidance Details: Cisco reported fiscal fourth-quarter results that exceeded expectations but provided an in-line forecast for fiscal 2026 that failed to impress investors. | Fell notably by -4.5% $68.51 -> $65.45 |
Oct 15, 2025 | Strategic Threat: Competitor Adoption Details: Reports emerged that major customers Meta and Oracle adopted Nvidia's Spectrum-X ethernet platform, representing a direct architectural threat to Cisco's AI networking dominance. | Muted (-0.6%) $69.15 -> $68.72 |
Nov 12, 2025 | Q1 FY26 Earnings Report Details: Cisco reported Q1 earnings of $1.00 per share, beating the consensus estimate of $0.98. Revenue also beat expectations, driven by early strength in AI-related demand. | Rose significantly by 3.1% $71.32 -> $73.56 |
Feb 9, 2026 | Price Action: Reached 52-Week High Details: Stock reached a 52-week high of $86.78, reflecting strong bullish momentum and high expectations leading into its Q2 earnings report. | Rose significantly by 2.3% $84.82 -> $86.78 |
Feb 11, 2026 | Q2 FY26 Earnings and Guidance Details: Cisco beat revenue and EPS estimates, reporting strong AI orders of $2.1B and raising full-year guidance. However, the stock fell sharply on a weaker-than-expected Q3 gross margin forecast. | Plummeted ~4-7% (after-hours) |
Position Sizing
1% - 3%
CONSERVATIVE
Stock is in a Moderate Volatility regime (1.9x S&P). However, the Bearish sentiment driven by tangible margin compression and a Contested moat creates significant fundamental headwinds. The high visibility on revenue is insufficient to offset the risk to profitability, mandating a Conservative sizing.
Diversification Alternatives
MSI
INDUSTRYOffers a more defensive, recurring revenue thesis in public safety, avoiding Cisco's cyclical margin pressures and the hyper-competitive AI networking space.
JNPR
INDUSTRYA more focused networking pure-play than Cisco, with strong positions in service provider and cloud verticals, potentially offering similar cyclical upside at a more attractive valuation.
Cisco is leveraging its dominant networking hardware incumbency to transition into a more software-centric, recurring revenue company, with its valuation now driven by its ability to capture the AI infrastructure build-out and translate it into sustained software and services growth.
Filter all news through the lens of the AI-driven network hardware refresh cycle and the success of its software/subscription transition, particularly in security and observability.
AI infrastructure orders from hyperscalers exceeding $1B+/quarter; Networking segment growth >+15% YoY; Total ARR growth accelerating to >+5% YoY; Security segment revenue returning to positive growth.
Deceleration in AI-related orders; market share loss in data center switching to Arista or Nvidia as reported by IDC; a stall in the campus networking refresh cycle; continued negative growth in the Security segment.
Minor quarterly fluctuations in the Collaboration (Webex) business — this market is mature and not the primary growth driver; individual product benchmark wins/losses against competitors unless tied to a major contract; general macro commentary on IT spending that isn't reflected in Cisco's specific order rates.
Repricing Catalyst
The market is re-pricing Cisco based on accelerating demand for its high-speed data center networking gear (Silicon One, Nexus) to support AI workloads. This is evidenced by $2.1 billion in AI infrastructure orders from hyperscalers in Q2 FY2026 alone, and management's guidance to exceed $5 billion in AI orders for the full fiscal year. Success in this hardware refresh is seen as the gateway to pull-through sales of higher-margin software and security subscriptions.
Networking (Switches, Routers, Wireless)
$33.2B TTM (54.4% of Total) · 66.4% MarginWhat It Is
Core switching (Catalyst 9000 series, Nexus 9000 series), routers, wireless access points (Meraki), and custom silicon (Cisco Silicon One G300 chip).
Who Pays & How
Enterprises and webscale cloud providers pay for the hardware that forms the backbone of their data centers and corporate campuses. Lock-in is high due to deep integration with network management software (DNA Center, Meraki Dashboard), decades of personnel training (CCNA/CCNP certifications), and the operational risk of replacing core network infrastructure.
Competition
Security (Firewalls, SSE, Splunk)
$8.0B TTM (13.1% of Total) · 70.9% MarginWhat It Is
Cloud-delivered security suite (Cisco Secure Access), firewalls, and observability/SIEM platform (Splunk).
Who Pays & How
Enterprises pay for integrated security solutions to protect their network, users, and applications. Customers choose Cisco to consolidate vendors and leverage deep integration between the network and security stack (e.g., embedding security in switches).
Competition
Collaboration (Webex Suite)
$4.4B TTM (7.2% of Total) · 70.9% MarginWhat It Is
Webex Suite (Meetings, Calling, Messaging), Contact Center solutions, and collaboration hardware (headsets, video devices).
Who Pays & How
Enterprises pay per-user subscription fees for a unified communication platform. Customers often choose Webex for its enterprise-grade security, reliability, and integration with Cisco's networking and security portfolio, as evidenced by two $1B+ megadeals in FY25 that included the Webex suite.
Competition
Observability (AppDynamics, ThousandEyes)
$1.2B TTM (2.0% of Total) · 70.9% MarginWhat It Is
Application performance monitoring (AppDynamics) and network intelligence (ThousandEyes).
Who Pays & How
IT departments pay subscription fees to monitor the performance of their applications and networks, identify issues, and ensure a good user experience.
Competition
Services
$14.8B TTM (23.3% of Total) · 70.9% MarginWhat It Is
Technical support and advanced services for Cisco's product portfolio.
Who Pays & How
Customers pay for maintenance contracts (SmartNet) and professional services to ensure the reliability and performance of their mission-critical Cisco infrastructure.
Competition
External Quote Links
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| FinViz |
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