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Cisco Systems CSCO shares have declined 10.8% in the past month, outperforming the Zacks Computer Networking industry’s and the Zacks Computer & Technology sector’s fall of 11% and 13.9%, respectively. CSCO shares have suffered from a challenging macroeconomic background and rising threat of recession due to tariffs on China, Mexico and Canada that have increased the possibility of a trade war. Apart from these factors, Cisco has been suffering from stiff competition in the networking business.
However, Cisco’s aggressive AI push and growing security dominance boost prospects. The company is expanding its portfolio by unveiling AI factory architecture developed in collaboration with NVIDIA NVDA. This is expected to drive up Cisco’s AI-driven revenues. Cisco had AI infrastructure orders worth more than $700 million at the end of the first half of fiscal 2025. CSCO remains on track to surpass $1 billion in AI infrastructure orders in fiscal 2025.
AI-driven enterprises have been signing deals to buy Cisco’s integrated systems, including Nexus, UCS, and additional solutions to power AI applications. Increasing deployment of AI-powered robotics and industrial security bodes well for CSCO’s industrial Internet-of-Things business. In the first half of fiscal 2025, orders grew more than 40%, with growth of over 50% in the second quarter of fiscal 2025 alone.
CSCO Stock Performance
Image Source: Zacks Investment Research
Cisco shares have outperformed industry peers, including NETGEAR NTGR and Extreme Networks EXTR, in the past month. Shares of NETGEAR and Extreme Networks have declined 10.4% and 25.9% over the same timeframe, respectively.
So, does the dip Cisco shares offer a buying opportunity? Let’s dig deep to find out more.
Cisco Benefits From Strong Portfolio, NVIDIA Partnership
Cisco’s expanded partnership with NVIDIA, under which the companies plan to offer solutions that help build AI-ready data center networks is a game changer. Cisco Secure AI Factory with NVIDIA is founded on the NVIDIA Spectrum-X Ethernet networking platform. Security is at the core of the solution and helps enterprises simplify, deploy, manage and secure AI infrastructure at any scale. The launch of 800-gig Nexus switches based on Cisco’s 51.2 terabit Silicon One chip in April is expected to drive orders from AI-based cloud customers.
Cisco’s strategy of infusing AI across Security and Collaboration platforms and developing Agentic capabilities across the portfolio is a key catalyst. It is leveraging Agentic AI to improve customer experience. The launch of Renewals Agent, an Agentic AI-driven solution co-developed with Mistral, and a new Assistant to help customers digitize and de-risk Network Change Management have been noteworthy developments in this regard.
Cisco’s security business is benefiting from strong demand for both Cisco Secure Access and XDR. On a combined basis, both solutions have gained more than 1,000 customers in the trailing 12 months, and each of the products has roughly one million enterprise users. Hypershield is also gaining traction.
Cisco integrated Talos into Splunk’s newly released Enterprise Security 8.0 solution and AppDynamics into Splunk’s on-prem log observer in the fiscal second quarter. The company also launched Splunk on Azure, Splunk Federated Analytics, and AI Assistant for Splunk Observability.
Its latest launch, Cisco AI Defense, enables and safeguards AI transformation within enterprises. With the exponential growth of AI, risks like data leaks, misuse of AI tools and sophisticated threats are also on the rise. Cisco AI Defense aims to address these challenges using its advanced network visibility and control, ensuring that enterprises can adopt AI while staying protected against security concerns.