Cisco Systems is the IBD Stock of the Day for Tuesday. Shares of the technology infrastructure and software company are hovering near a buy point, following a company conference last week where Cisco announced several AI-related efforts.
Cisco stock shed a fraction to close at 65.33 on the stock market today. Shares briefly cleared a 65.75 cup-with-handle buy point in Tuesday's trading. Cisco stock also overtook that buy point on June 6 before retreating. CSCO stock is ahead 11% year-to-date.
The Dow Jones giant last week hosted its Cisco Live conference in San Diego, which focused on how the 40-year-old tech company can take advantage of enterprise demand for AI computing.
The company announced new networking devices and architecture it said were "purpose-built for AI workloads." Cisco also highlighted its solutions for "AI-ready data centers." That includes a partnership with Nvidia announced earlier this year to simplify building data centers capable of training and operation AI algorithms.
Following the event, Melius Research's Ben Reitzes reiterated a buy call and target price of 78 in a client note on June 10.
"Cisco's aims for its new switches, routers, and security products to provide operational simplicity in a unified platform," Reitzes wrote. "In plain English, there's a new product cycle coming, as we expected, with new AI and campus switches, which help product orders pick up."
He added, "Cisco is one of the cheapest stocks in our coverage and seems be getting on the right side of AI, which can help expand its multiple."
Cisco stock gained Monday after Deutsche Bank upgraded it to a buy from hold. Deutsche analyst Matt Niknam said the company has tailwinds from AI, its campus portfolio technology refresh and favorable near-term competitive dynamics, according to a description of the note published by The Fly.
Cisco's Fiscal Q3 Results
Cisco also recently posted strong results for its fiscal third quarter, which ended April 26. Cisco sales climbed 11% to $14.1 billion, ahead of estimates for $14.05 billion. Earnings rose 9% to 96 cents per share, on an adjusted basis, beating by four cents.
Cisco stock gained 4.9% on May 15, the first trading day following the report.
AI network infrastructure orders exceeded $600 million in fiscal Q3, up from $350 million in the previous quarter. Cisco credited new AI-centric data centers from cloud computing companies for driving demand for ethernet networking upgrades.
"Enterprise AI orders are also showing momentum with Cisco's AI factory with Nvidia likely to contribute in fiscal 2026," Goldman Sachs analyst Michael Ng said in a client note following Cisco's earnings. "Sovereign AI, as evidenced by newly announced Saudi Arabia and UAE deals, are also picking up."
Earnings and sales growth have accelerated in back-to-back quarters.
Cisco Stock Composite Rating
Cisco stock holds a Composite Rating of 92 out of a best-possible 99, according to IBD Stock Checkup.
While shares slid last week, Cisco stock found support just above its 21-day moving average Friday before bouncing higher Monday.
Wall Street has mixed views on Cisco stock overall but optimism is improving. Roughly 56% of the 25 analysts following Cisco stock rate it a buy, according to FactSet, compared to 44% with neutral call. A year ago, only seven out of 28 analysts were calling Cisco stock a buy. The rest were neutral.
Shares are about 20% below a record high from a high of 82 Cisco stock reached in March 2000, back when its network hardware powered the dot-com boom. Cisco has diversified its business over time since then. Its most recent big move was a $28 billion acquisition of Splunk, which provides data analytics software and cybersecurity features.
