In December 2013, Cisco Systems (Nasdaq:CSCO) was trading at about $20. Since then, the stock has reached a high of around $64 in 2021 but has now dropped to around $45. With potential in artificial intelligence and humanoid robots, Cisco Systems could be undervalued similar to Microsoft a few years back. Analysts expect earnings to grow by 8% in 2026, with the stock trading at a low multiple. The company has a strong balance sheet with $19.52 billion in cash and offers a 3.5% dividend yield, with room for growth. Share buybacks are ongoing, and a cost-cutting plan could drive profits after 2025. In terms of growth, the increasing number of connected devices will benefit Cisco Systems. Investments in AI startups and a partnership with NVIDIA show potential for growth in AI networking demand. The convergence of AI with hardware could lead to mass adoption of humanoid robots. While there are risks such as a recession or competition, Cisco Systems remains underrated and has similarities to Microsoft’s growth trajectory. Overall, there is potential for significant upside for investors who buy the stock now.
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