Cisco: Ahead of Earnings, We’re On Board With the AI Growth Trajectory

Key Morningstar Metrics for Cisco Systems

• : $115.00
• : ★★★

• Morningstar Economic Moat Rating

  : Wide

• Morningstar Uncertainty Rating

  : High

We’ve refreshed our model assumptions for Cisco Systems CSCO ahead of the firm’s fiscal fourth-quarter earnings report on Aug. 12.

Why it matters: We’re more constructive on Cisco’s longer-term growth in the age of artificial intelligence. We believe the company has a durable, sticky position in AI networking and optics, structurally raising its growth and warranting a higher valuation.

• We still see core enterprise and campus networking driving the bulk of Cisco’s results, but we expect AI to increasingly drive growth. Even as a minority of total networking sales, we expect AI to meaningfully raise Cisco’s midcycle growth profile compared to the last decade.
• Beyond data center switching and routing for AI, we see AI raising the growth profile of the campus and enterprise networking markets. We expect…