Cisco Stock Is Headed for a 25-Year High. AI Networking Gear Is in High Demand.

Cisco stock on pace for its highest close since March 2000. (Josep Lago / AFP / Getty Images)

Key Points

• Cisco’s fiscal first-quarter networking revenue of $7.8 billion surpassed analyst estimates of $7.5 billion, driven by AI infrastructure demand.
• Cisco’s stock was up 4.3%, on pace for its highest close since March 2000; it has gained 30% this year, outperforming the S&P 500’s 16% increase.
• Analysts raised price targets for Cisco, citing strong AI orders and solid financial results, though some view the stock as fairly valued.

Cisco Systems stock was rising Thursday after fiscal first-quarter earnings showed that artificial-intelligence demand is helping the networking company grow.

Cisco reported better-than-expected fiscal first-quarter earnings and revenue after the stock market closed on Wednesday, while also providing strong guidance for the second quarter and fiscal year.

Networking revenue of $7.8 billion beat analyst estimates of $7.5 billion and was a standout figure in the quarter. Cisco’s networking segment includes gear used in AI data centers, and it has seen growth as enterprise demand for AI infrastructure continues to rise.

“Networking has an AI play in optics and silicon—as AI orders at hyperscalers accelerated to $1.3B,” Melius Research analyst Ben Reitzes wrote in a research note on Thursday. He raised his price target on Cisco to $100 from $84 while maintaining a Buy rating on the stock.

“We think this networking momentum can continue as this space has a clear secular tailwind,” he added.

UBS analyst David Vogt also raised his price target to $90 from $88 on Thursday while maintaining a Buy rating on the stock, “following the combination of solid F1Q results led by strong ‘Product’ orders, a F2Q guide better than feared, and a bump to the FY26 revenue and EPS outlook.”

As of midday Thursday, Cisco shares were up 4.3% and on pace for their highest close since March 31, 2000, according to Dow Jones Market Data. The stock, which was the best performer in the Dow Jones Industrial Average on Thursday, is now down only 3.6% from its all-time closing high of $80.06, hit on March 27, 2000.

The stock has now risen 30% this year, outperforming the 16% gain of the S&P 500 . Still, of the 25 analysts surveyed by FactSet, 14 rate the stock as a Buy while 10 say it’s a Hold and one says it’s a Sell.

“Execution remains crisp with strong AI orders, good FCF [free cash flow], cost controls, margin strength (even in light of higher input costs) and buy-backs,” Raymond James analyst Simon Leopold wrote on Wednesday night. Leopold rates the stock as Market perform without a price target, though, as he believes Cisco looks “fairly valued at this time.”

Shares of Cisco are trading at 18.3 times earnings expected over the next 12 months, which is above the 5-year average of 14.4 times forward earnings.

Write to Angela Palumbo at angela.palumbo@dowjones.com