Cisco Systems Stock Can Sink, Here Is How
Cisco Systems (CSCO) is facing threats. Even the biggest names aren’t invincible. Stocks can drop sharply without warning – wiping out months or years of gains in a matter of weeks. History shows that sudden market swings can hit any company, no matter how dominant it seems.
After a stellar year propelled by surging AI infrastructure demand, lifting its stock to a 25-year high, Cisco Systems faces increasing scrutiny. Despite a robust AI pivot and solid earnings, fierce competition from rivals and lingering supply chain fragilities could expose vulnerabilities, suggesting that the recent powerful ascent may hinge on flawless execution to maintain momentum.
What Could Send The Stock Crashing?
- AI Infra Competition: Cisco faces declining core network revenue (down 23% in Q1 FY25) as rivals like Nvidia (up 167.7% in Q3 2025) and Arista rapidly gain data center AI networking share, despite Cisco’s AI investments and over $2 billion in FY25 AI infrastructure orders.
- Cyber Attack Risk: Active exploitation of Cisco’s critical zero-day flaws (CVE-2025-20393, CVSS 10.0) by state-backed groups and escalating AI-driven attacks (86% of orgs faced incidents in past year) erode customer trust and demand rapid patching.
- Splunk Integration: Challenges integrating Splunk ($28B acquisition) persist, risking cultural clashes, talent drain, and slower-than-expected ROI, despite positive financial projections and increased security segment growth (9% in Q4 FY25).
- Better Value & Growth: FFIV Leads Cisco Systems Stock
- Pay Less, Gain More: MSI, FFIV Top Cisco Systems Stock
- Cisco Systems Stock Jump Looks Great, But How Secure Is That Gain?
- Stronger Bet Than Cisco Systems Stock: MSI, FFIV Deliver More
- Cisco Systems Stock To $54?
- Stronger Bet Than Cisco Systems Stock: FFIV Delivers More
What’s The Worst That Could Happen?
When looking at risk, it helps to see how CSCO’s stock reacts during major market sell-offs. The Dot-Com Bubble hit it hardest, dropping about 86% from peak to trough. The Global Financial Crisis wasn’t far behind with a 60% dip. Even more recent events like the Inflation Shock and Covid Pandemic caused losses between 33% and 37%. Smaller corrections, like in 2018, still dragged it down nearly 25%. Solid fundamentals only go so far—when markets turn, CSCO isn’t immune to significant pullbacks.
Is Risk Showing Up In The Company’s Financials Yet?
Let’s take a look at fundamentals
- Revenue Growth: 8.9% LTM and 3.7% last 3-year average.
- Cash Generation: Nearly 22.1% free cash flow margin and 22.5% operating margin LTM.
- Valuation: Cisco Systems stock trades at a P/E multiple of 30.0
| CSCO | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Communications Equipment | – |
| PE Ratio | 30.0 | 23.5 |
|
|
||
| LTM* Revenue Growth | 8.9% | 6.0% |
| 3Y Average Annual Revenue Growth | 3.7% | 5.4% |
|
|
||
| LTM* Operating Margin | 22.5% | 18.8% |
| 3Y Average Operating Margin | 24.2% | 18.3% |
| LTM* Free Cash Flow Margin | 22.1% | 13.4% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell CSCO Stock.
A Multi Asset Portfolio Beats Picking Stocks Alone
Individual stocks can soar or tank but multi asset exposure steadies the ride. A spread out portfolio captures upside while limiting the damage from any one market.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices