Ali Hassan
2 min read
In This Article:
On May 16, New Street analyst Pierre Ferragu downgraded the rating on Cisco Systems, Inc. (NASDAQ:CSCO) from Buy to Neutral, lowering the price target from $75 to $70.
Ferragu mentioned that Cisco's gross margin has taken a hit, with a slight decline in the April 2025 quarter. The analyst added that the gross margins had declined by 10 basis points quarter-over-quarter in April 2025. The analyst expects a further drop of 60 basis points in the July 2025 quarter, impacted by tariffs. The analyst believes that the margin expansion should resume eventually, however, the current valuation metrics reflect a risk with limited upside potential.
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On the contrary, Wells Fargo analyst Aaron Rakers upgraded the rating on CSCO from Equal Weight to Overweight on May 15, increasing the price target from $72 to $75. Rakers has made an upgrade following the strong quarterly performance driven by AI. The analyst highlighted Cisco’s rising AI momentum to be a key factor for the company's growth. During the third quarter of FY2025, Cisco Systems, Inc. (NASDAQ:CSCO) received AI infrastructure orders worth more than $600 million, driven by web-scale customers. The total orders from AI are now over $1 billion for the nine months of FY2025.
Cisco has gained momentum from a boom in data center investment as the demand for generative AI continues to soar. Cisco, along with other U.S. tech giants, will be supporting the recently announced "UAE Stargate" AI data center project. With AI-driven investments, Cisco Systems now expects to end FY2025 with total revenue between $56.5 billion and $56.7 billion, compared to its previous projection of $56 billion to $56.5 billion. Rakers sees strong AI momentum as a continuation for CSCO.
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the leading companies that designs and sells technologies that power the internet. With its industry-leading AI-powered solutions and services, the company allows its customers and partners to enhance productivity, unlock innovation, and strengthen digital resilience.
While we acknowledge the potential of CSCO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CSCO and that has 100x upside potential, check out our report about this cheapest AI stock.
Read Next: 30 Best Stocks to Buy Now According to Billionaires and 15 Small-Cap Healthcare Stocks Hedge Funds Are Buying.
Disclosure. None.
