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On Thursday, Citi analysts maintained a positive stance on Cisco Systems Inc. (NASDAQ:CSCO), increasing the stock’s price target from $71.00 to $73.00 while reiterating a Buy rating. Currently trading at $64.08 and commanding a market capitalization of $255 billion, Cisco has shown strong momentum with a 28.2% price return over the past six months. The adjustment follows Nvidia’s announcement of a twofold year-over-year increase in enterprise data center sales, driven by rising demand for model fine-tuning, RAG, and agentic-AI workflows.
Citi analysts believe that Nvidia’s performance and comments lend support to Cisco’s recent collaboration with Nvidia. This partnership is expected to contribute to Cisco’s artificial intelligence (AI) order outlook, which was previously projected at $1 billion during its earnings call. The new price target reflects an expanded 18x price-to-earnings (P/E) multiple, an increase from the former 17.8x, to mirror the growing confidence in Cisco’s AI capabilities with respect to its fiscal year 2026 earnings per share (EPS). According to InvestingPro, 16 analysts have recently revised their earnings estimates upward for the upcoming period, with the stock currently trading at a P/E ratio of 27.78x and maintaining a healthy gross profit margin of 65.13%.
Cisco, a leading player in communication equipment, has been identified by Citi as the top pick in its category for the year 2025. This selection is based on the anticipated growth in the AI sector and Cisco’s current valuation, which is seen as relatively undemanding. The company’s strategic moves and partnerships, particularly in the AI domain, are expected to bolster its position in the market.
The raised price target is a testament to the belief that Cisco’s AI-driven growth strategy will yield positive results. With the enterprise data center market expanding and Cisco’s prominent role within it, the company is poised to capitalize on the opportunities presented by the increasing demand for advanced AI applications and services.
Investors and market watchers will likely keep an eye on Cisco’s performance in the AI space, as well as its collaboration with Nvidia, to gauge the company’s progress and the potential impact on its financial outcomes. The updated price target by Citi serves as an indicator of the market’s optimism regarding Cisco’s direction and future earnings. For deeper insights into Cisco’s valuation and growth prospects, InvestingPro offers a comprehensive analysis through its Pro Research Report, which includes detailed financial health metrics, showing an overall "GOOD" rating and revealing that the stock appears slightly overvalued based on their proprietary Fair Value model.
In other recent news, Cisco Systems Inc. reported revenues of $14.0 billion in its latest earnings report, slightly exceeding its guidance range. The company saw an 11% organic increase in product orders, excluding Splunk (NASDAQ:SPLK), and has secured over $350 million in AI infrastructure orders during the quarter. Cisco has raised the lower end of its fiscal 2025 growth guidance to 4.1%, up from 2.8% in the previous quarter. In a strategic move, Cisco and NVIDIA Corporation (NASDAQ:NVDA) announced a partnership to develop a unified architecture for AI-ready data center networks, aiming to simplify the management of enterprise and cloud provider networks. Cisco’s financial standing was affirmed with an ’AA-’ issue-level rating by S&P Global Ratings for its proposed unsecured notes, intended to reduce commercial paper. Analysts have responded positively to Cisco’s performance, with UBS raising its stock price target to $70 and Piper Sandler increasing it to $72, both maintaining a Neutral rating. Citi also raised its price target to $71 and maintained a Buy rating, citing Cisco’s robust core networking business performance and significant Cloud AI orders. These developments reflect Cisco’s ongoing efforts to strengthen its market position and adapt to evolving industry demands.
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