Cisco Systems Analysts Raise Forecasts On 'Meaningful Traction' Across 3 AI Investments

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Shares of Cisco Systems Inc (NASDAQ: CSCO) declined in early trading on Thursday, even after the company reported upbeat fiscal first-quarter earnings.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

  • Goldman Sachs analyst Michael Ng maintained a Neutral, while raising the price target higher from $51 to $56.
  • Piper Sandler analyst James Fish reiterated a Neutral, while lifting the price target from $52 to $57.
  • Morgan Stanley analyst Meta Marshall reaffirmed an Overweight rating, while raising the price target from $58 to $62.
Goldman Sachs: Cisco Systems reported its fiscal first-quarter earnings at 91 cents per share, higher than consensus of 87 cents per share, with the beat being driven by better-than-expected gross margins and in-line revenue of $13.8 billion, Ng said in a note. Order growth ex-Splunk accelerated to 9% year-on-year, with 17% growth in Enterprise and 22% in Service Provider & Cloud, he added.

"Webscale, which is a subset within Service Provider & Cloud, was a bright spot with orders growing triple digits," including more than $300 million of AI orders, the analyst wrote. The AI momentum puts Cisco Systems "well on track" to exceed its fiscal 2025 target of $1 billion in AI orders, he further stated.

Piper Sandler: Cisco Systems posted total revenues of $13.84 billion, which represents a 6% year-on-year decline but came in higher than expectations by around 1%, Fish said. "The upside again came via Product, though primarily was due to ~ $20M higher Splunk contribution," he further wrote.

Management raised their annual revenue guidance by $200 million at the midpoint, "given the demand environment, but more likely the upside of recurring Splunk revenue," the analyst stated. This led Cisco Systems to raise its earnings guidance to $3.60-$3.66 per share, he added.

Morgan Stanley: Cisco Systems reported higher-than-expected quarterly results, largely due to Splunk's outperformance, Marshall said. "Upending on networking is improving coming out of inventory digestion," he added.

The company benefited from "meaningful traction" across three AI investments, the first being more than $300 million in AI orders, the analyst stated. Second was double digit growth in networking orders due to improving connectivity ahead of AI and the third was "in terms of data center modernization for enterprises ahead of AI investments," he further wrote.

Price Action: Shares of Cisco Systems had declined by 1.30% to $58.41 at the time of publication on Thursday.