Cisco (CSCO): Has the 30% YTD Rally Left the Stock Overvalued or Still Undervalued?

Cisco Systems (CSCO) has quietly kept shareholders happy this year, with the stock up about 30% year to date and roughly 35% over the past year, outpacing many large tech peers.

See our latest analysis for Cisco Systems.

That move has been underpinned by solid execution, with Cisco leaning into higher margin software and security subscriptions. The latest 90 day share price return of 12.81% shows momentum still building on a strong multi year total shareholder return base.

If Cisco’s run has you thinking more broadly about opportunities in digital infrastructure, it might be worth scanning high growth tech and AI stocks for other potential long term compounders.

But with earnings rising, a modest discount to analyst targets, and valuation metrics still below many headline AI names, investors now face a key question: Is Cisco still mispriced, or has the market fully baked in its next leg of growth?

Most Popular Narrative Narrative: 9.7% Undervalued

With Cisco closing at $76.95 against a widely followed fair value near $85, the dominant narrative sees more upside tied to an extended AI networking cycle.

The rapid acceleration in AI infrastructure investment highlighted by record AI infrastructure orders from webscale/cloud customers (doubling targets to $2B in FY25) and continued strength in order pipeline positions Cisco to benefit from surging demand for high performance, AI optimized networking hardware, which is expected to drive both revenue and margin expansion as next generation networks scale globally.

Read the complete narrative.

Want to see what kind of steady, compounding revenue growth, expanding margins, and future earnings multiple are baked into that fair value math? The narrative spells it out.

Result: Fair Value of $85.24 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside case could unravel if hyperscaler AI orders slow sharply or security growth keeps lagging, which would pressure Cisco’s margins and valuation narrative.

Find out about the key risks to this Cisco Systems narrative.

Build Your Own Cisco Systems Narrative

If this view does not quite fit your own or you prefer digging into the numbers yourself, you can build a custom narrative in minutes, Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Cisco Systems.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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