AI demand will drive Cisco higher

Article Excerpt

CISCO SYSTEMS INC. $60 is a buy. The company (Nasdaq symbol CSCO; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.0 billion; Market cap: $240.0 billion; Price-to-sales ratio: 4.5; Dividend yield: 2.7%; TSINetwork Rating: Average; www.cisco.com) is a leading maker of products that link and manage computer networks. Cisco also continues to see strong demand for products related to artificial intelligence (AI), as those software programs require faster data transfer speeds and capacity. Orders related to AI totalled $300 million in its fiscal 2025 first quarter, ended October 26, 2024, and should reach $1.0 billion for the full year. The stock is up 14% in the past year. Even so, it continues to trade at a moderate 16.4 times the $3.66 a share it will probably earn in fiscal 2025. That’s a particularly attractive multiple in light of Cisco’s high research spending (17% of revenue). The $1.60 dividend yields a solid 2.7%. Cisco Systems is a buy. buy…