CSCO Cisco Systems, Inc.

Cisco Systems, Inc. · NASDAQ

Market Open

106.47

▲ ⁦+1.51%⁩ (+1.58)

Market Cap$413.5B

Beta0.99

52w Low52w High

66.81130.37

Last Week

⁦-3.08%⁩

EL7 Factor Analysis

How we score this

Overall85

Excellent — top fifth of the marketHigh FlyerF 7/9SafeCongress sellingBetter than 85% of Market stocks, per EL7's model

Factor	Score	Value	Avg	Rank
Valuation	26	31.4x	17.5x	Bottom tier
Growth	69	11.8%	7.1%	Top tier
Quality	87	16.0%	4.5%	Top tier
Safety	76	1.0x	2.6x	Top tier
Capital Return	68	1.58%	0.06%	Top tier
Momentum	87	57.2%	-0.9%	Top tier
Sentiment	41	14	3	Around median

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Monthly plan

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Analyst Consensus

This section combines price targets, revision history, analyst coverage changes, and an AI summary of what changed on the Street.

Price Target· 18 analysts setting price target

$129.77

⁦+21.9%⁩

Current Price $106.47·Median $135.00

Low

$110.00

High

$150.00

Current price

$106.47

Average target

$129.77

Street summary

Slight decline in Cisco price target consensus

The consensus price target held steady at 129.77 over the last 7 days, with no change in the number of analysts. Over 30 days, it fell from 132 by 2.23 (1.69%), while the number of analysts remained at 18. The current range is between 110 and 150, with a median of 135, indicating variation in targets; both the consensus and median are above the current price of 117.39.

As of 2026-10-07

Revisions momentum · 30d

⁦-1.3%⁩

Average rating

★ 3.83

Buy

Analyst coverage

Buy conviction

66%

High

Rating activity · 30d

0↑ · 0↓

Target dispersion

38%

Wide

Analyst ratings over time29 analysts rating

Strong BuyBuyHoldSellStrong Sell

Rating trend — last 12 months3.63 → 3.83

Recent analyst moves

= Reiterate2026-09-30
Bernstein
Market Perform
= Reiterate2026-08-31
Deutsche Bank
Buy
⬇ Downgrade2026-08-14
HSBC
BuyHold

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Key Financials

Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.

StockSector medianSector averagetypical sector range

MetricValuePosition within sectorVerdict

P/E (TTM)
31.40x
7.23x57.84x
Cheap
Forward P/E
21.93x
5.02x40.12x
Cheap
EV / EBITDA
25.78x
4.40x35.24x
Near median
FCF Yield
3.1%
-82.0%10.1%
Strong
Revenue Growth YoY
11.8%
-20.2%67.3%
Near median
EPS Growth YoY
31.0%
-176.3%184.8%
Above average
Gross Margin
64.5%
13.1%79.5%
Strong
ROIC
16.0%
-64.6%26.8%
Strong
Net Debt / EBITDA
0.99x
0.27x3.46x
Low debt
Dividend Yield
1.6%
0.0%1.7%
High
Payout Ratio
49.4%
6.5%72.8%
Moderate
Altman Z-Score
4.00
-12.8313.35
Above average

Financial Analysis

Stock Analysis

AI-generated

Last updated: 2026-10-19Based on 2026-08-12 data

Company Overview

Cisco Systems sells networking equipment, chips, optics, software, and services that connect, secure, and monitor the performance of data centers and enterprise networks. Its ecosystem includes Silicon One, Acacia, and Nexus in networking, Splunk in security and observability, and Webex in collaboration. In quarter 4 of fiscal year 2026 (ended 2026-07-25), product revenue totaled $13.5 billion and services revenue $3.8 billion, while subscriptions represented 48% of revenue. Software revenue totaled $6.2 billion for the same period; this classification overlaps with the product and services mix and is not an additional segment to be added to them.

According to EL7 data, revenue in quarter 4 of fiscal year 2026 was approximately $17.3 billion, net income was $3.9 billion, and diluted earnings per share were $0.98. Gross margin was 64.1% and operating margin, as calculated by EL7, was 24.7%, while operating cash flow according to EL7 data was approximately $5.4 billion. A reliable year-over-year revenue growth comparison is unavailable for this quarter. For fiscal year 2026 (ended 2026-07-25), revenue totaled $63.3 billion, net income $13.3 billion, and gross margin 64.5%.

Cisco's business with hyperscalers is expanding, but the shift toward artificial intelligence has not made the rest of its operations marginal: AI infrastructure for these customers represented approximately 6% of fiscal year 2026 revenue. Orders for this business totaled $9.3 billion during fiscal year 2026, with a mix of approximately 60% Silicon One systems and 40% optics. In quarter 4 of fiscal year 2026, product orders increased 35% compared with the same quarter of the previous fiscal year, and 25% excluding hyperscalers; this also ties the company's expansion to network upgrades across enterprises and the public sector.

Key numbers

Q4 FY2026

Revenue (EL7 data): $17.3B
Gross margin: 64.1%
Operating margin: 24.7%
Net income: $3.9B; +51.3%vs a year earlier
Diluted EPS: 0.98; +53.1%vs a year earlier
Net cash (cash + short-term investments − debt): -$22.3B

Last 12 months to 2026-07-25

Revenue: $63.3B
Net income: $13.3B; 21.0%of revenue
Free cash flow (operating cash flow − capex): $10.6B; 16.8%of revenue

What changed since the last analysis

On 2026-10-19, EL7's calculated free cash flow figure for the last 12 months through 2026-07-25 was updated to $10.6 billion, versus $12.8 billion for the same period in the previous analysis, reducing the amount of cash available in the assessment of funding capacity.

What's Driving the Stock

Cisco places the conversion of AI orders into revenue at the forefront of its business trajectory: it received $4 billion in AI infrastructure orders from hyperscalers in quarter 4 of fiscal year 2026 (ended 2026-07-25), and targets $7.5 billion in revenue from this business in fiscal year 2027. A news report published on 2026-10-12 announced its collaboration with Nvidia to develop an optical module and networking technologies for AI data centers, supporting the expansion of its technology offering without disclosing a contract value.
Enterprise network upgrades support demand beyond hyperscalers: campus networking orders increased 20% and data center networking orders more than 35% in quarter 4 of fiscal year 2026 compared with the same quarter of the previous fiscal year. Wi-Fi 7 represented more than 50% of wireless networking orders for the same period, while a global U.S. bank ordered 1000 intelligent data center switches to replace competitors' networking and firewall equipment.
Management's guidance for fiscal year 2027 targets revenue between $72.2 billion and $73.4 billion and adjusted earnings per share between $5.05 and $5.11. For quarter 1 of fiscal year 2027, it targets revenue between $18 billion and $18.2 billion and adjusted earnings per share between $1.32 and $1.34; the earnings announcement expected on 2026-11-11 will test the delivery of these expectations.
The hardware mix and memory costs keep profitability under scrutiny despite strong orders: adjusted gross margin was 66.3% in quarter 4 of fiscal year 2026, down 210 basis points compared with the same quarter of the previous fiscal year. Management targets an adjusted gross margin between 65% and 66% in quarter 1 of fiscal year 2027, with an adjusted operating margin between 35.5% and 36.5%, making expense control necessary to absorb product cost pressure.

Buying & Selling Case

▲ Buying Case8 pts

+Cisco has actual AI infrastructure demand that goes beyond product offerings alone: hyperscaler orders totaled $9.3 billion in fiscal year 2026 (ended 2026-07-25), and P200 systems secured three design wins with three different hyperscalers through quarter 4 of fiscal year 2026. AI orders from emerging cloud, sovereign cloud, and enterprise customers also exceeded $1 billion in fiscal year 2026, broadening the opportunity beyond the largest operators.
+Renewed demand in enterprise businesses gives growth a broader foundation than cloud AI investment: enterprise orders increased 21% and public sector orders 30% in quarter 4 of fiscal year 2026 compared with the same quarter of the previous fiscal year. The global U.S. bank's order for 1000 intelligent switches demonstrates Cisco's ability to replace competitors' equipment with a platform combining networking and security.
+Subscriptions and contracts support revenue visibility: remaining performance obligations totaled $46.7 billion at the end of quarter 4 of fiscal year 2026, up 7% compared with the same quarter of the previous fiscal year, and annual recurring revenue totaled $32.1 billion, up 3% on the same basis. Subscriptions represented 48% of quarterly revenue, adding a recurring base to the hardware business.
+There is evidence of broader adoption of the security and observability ecosystem: Splunk added more than 280 new customers in quarter 4 of fiscal year 2026 and exceeded its target of 1000 new customers for fiscal year 2026. Firewall orders also increased more than 30% in quarter 4 of fiscal year 2026 compared with the same quarter of the previous fiscal year, and the number of new customers for new security products exceeded 6400 from their launch through the end of the quarter.

What would change this view

When: 2026-11-11

Meeting the targeted revenue range of $18 to $18.2 billion for quarter 1 of fiscal year 2027
▲ Positive
Revenue reaching at least $18.2 billion in the expected earnings announcement strengthens the buying case by confirming Cisco's ability to convert strong demand into sales at the upper end of guidance.
▼ Negative
Revenue falling below $18 billion in the expected earnings announcement strengthens the selling case by calling into question the pace of order conversion into revenue.
Meeting the targeted adjusted gross margin range of 65% to 66% for quarter 1 of fiscal year 2027
▲ Positive
Adjusted gross margin reaching at least 66% in the expected earnings announcement strengthens the buying case by confirming Cisco's ability to absorb memory costs and the hardware mix.
▼ Negative
Adjusted gross margin falling below 65% in the expected earnings announcement strengthens the selling case by indicating cost pressure beyond the targeted range.

When: Fiscal year 2027

Valuation

The median analyst target is $135, within a range of $110 to $150 across 18 analysts; this method incorporates growth expectations and is inherently inclined toward optimism. The industry-multiple valuation is $79, within a range of $47 to $114, based on next year's earnings and a median multiple of 16.5 across 30 companies, valuing Cisco's earnings relative to its peers. The discounted cash flow model produces a value of $64, within a range of $51 to $84 and at a discount rate of 9.6%, to measure the cash expected to be generated; this model is inherently inclined toward conservatism. The no-growth value is $28 at a discount rate of 9.6%, representing current after-tax operating profit remaining constant forever. The analyst-target and industry-multiple ranges overlap, and the industry-multiple and cash-flow ranges overlap, but the central values diverge; analyst targets give greater weight to expected growth, the industry multiple links earnings to peers, while cash flow links value to cash generation, and the no-growth method excludes any subsequent expansion.

BuyAnalyst target: $129.77(+21.9%)

Figures in the text are as of 2026-10-19; the live price is shown at the top of the page.

FAQ

Has Cisco become a company primarily dependent on artificial intelligence?

AI infrastructure for hyperscalers represented approximately 6% of revenue in fiscal year 2026 (ended 2026-07-25), so most revenue continued to come from the company's other businesses. However, orders for this business totaled $9.3 billion during fiscal year 2026, and management targets $7.5 billion in revenue from it in fiscal year 2027. Cisco ties this opportunity to Silicon One systems and Acacia optics, with three P200 system design wins at three hyperscalers through the end of quarter 4 of fiscal year 2026. The key distinction is that orders measure contracted demand, while revenue depends on delivery and accounting recognition.

Why might Cisco's margins decline despite strong networking demand?

Gross margin in quarter 4 of fiscal year 2026 (ended 2026-07-25) was 64.1%, and operating margin as calculated by EL7 was 24.7%. On adjusted measures, gross margin was 66.3%, down 210 basis points compared with the same quarter of the previous fiscal year, and management attributed the pressure to a greater hardware share and memory costs. Management believes that serving major hyperscaler orders does not require a corresponding increase in expenses, helping absorb gross margin pressure. This is why guidance for quarter 1 of fiscal year 2027 combines an adjusted gross margin of 65% to 66% with an adjusted operating margin of 35.5% to 36.5%.

Earnings callEDGAR filings30-day newsInsider activity

Automated analysis for informational purposes only — not investment advice.

The disclosed Secure Email Gateway vulnerability, according to the news report published on 2026-10-15, received a severity rating of 9.8 and was being actively exploited. This incident adds a direct test of Cisco's product security as the company expands its offering through Secure Access, XDR, HyperShield, and AI Defense, and raises the possibility of remediation costs whose value has not been specified.

+Earnings are supported by cash generation: operating cash flow according to EL7 data was approximately $14.2 billion for the last 12 months through 2026-07-25, equivalent to 107% of net income of $13.3 billion for the same period. Free cash flow as calculated by EL7 (operating cash flow minus capital expenditures) for the last 12 months through 2026-07-25 was approximately $10.6 billion, supporting the ability to fund investment and return capital.

+Control over chips and the supply chain gives Cisco tools to fulfill demand: management confirmed during the 2026-08-12 call that there were no material lead-time issues and that it dealt directly with TSMC to secure chips. It also reduced memory usage in Wi-Fi 7 by 50% during a 90-day development period, and plans to extend Silicon One across high-performance networking systems by fiscal year 2029.

+Fiscal year 2027 guidance sets specific financial targets for expansion, with revenue between $72.2 billion and $73.4 billion and adjusted earnings per share between $5.05 and $5.11. Management expected security and observability growth to improve to the high single digits in fiscal year 2027, and services to return to low-single-digit growth, making the required execution broader than a single business.

+Cisco's momentum pillar scores 92 out of 100 within its industry, ranking 6 out of 63 according to data for the period ended 2026-07-25; this pillar measures relative price performance strength. This supports the market case for the stock, while remaining separate from the ability to convert orders into revenue and cash.

▼ Selling Case7 pts

−Hardware growth puts pressure on sales economics: adjusted gross margin in quarter 4 of fiscal year 2026 (ended 2026-07-25) declined to 66.3%, down 210 basis points compared with the same quarter of the previous fiscal year, because of a greater hardware share and memory costs. Management expects mix pressure to continue during fiscal year 2027; maintaining operating profitability therefore depends on expense efficiency despite lower product margins.
−The targeted jump in AI revenue remains tied to the fulfillment of large, irregular orders from major customers: Cisco targets $7.5 billion in revenue from hyperscalers in fiscal year 2027, following $9.3 billion in orders in fiscal year 2026. Management explained that these orders are very large and placed well ahead of delivery, making the timing of revenue recognition an important factor and preventing order value from being treated as realized revenue.
−Debt exceeds the cash and short-term investments available in the comparison: total debt according to EL7 data was approximately $29.5 billion versus $7.2 billion in cash and short-term investments at the end of quarter 4 of fiscal year 2026. The comparison excludes long-term marketable securities, but shows that short-term cash alone does not cover reported debt.
−The Secure Email Gateway vulnerability with a severity rating of 9.8, reported in the 2026-10-15 news item with confirmation of active exploitation, exposes Cisco to remediation and product security risks at the core of its business. The incident carries particular weight because the company seeks to sell networking and security as an integrated ecosystem, while no financial cost for the incident was specified in the context.
−The 14% growth in security revenue in quarter 4 of fiscal year 2026 compared with the same quarter of the previous fiscal year cannot be generalized as a sustainable pace; management explained that large, on-premises, longer-duration Splunk deals boosted quarterly revenue. It expected high-single-digit security growth for fiscal year 2027, meaning continued improvement requires broader demand beyond the timing effect of those deals.
−Part of sales growth is tied to price increases rather than volume expansion alone: management estimated that pricing contributed approximately 5 percentage points to revenue growth in quarter 4 of fiscal year 2026 compared with the same quarter of the previous fiscal year, and plans for a contribution between 4 and 5 percentage points in fiscal year 2027. As the comparison begins to move past the effect of those increases, underlying demand will become more important in maintaining the pace of business.
−Network upgrades do not imply unrestricted expansion in customer budgets; management said during the 2026-08-12 call that enterprises are reprioritizing spending within existing budgets and moving funds from other areas into information technology. It also explained that demand to replace equipment that had reached end of support in the context of Mythos had not materially affected results through quarter 4 of fiscal year 2026, meaning this opportunity needs to move from discussions and potential projects into orders.

Delivering the $7.5 billion AI infrastructure revenue target for hyperscalers

▲ Positive: Generating at least $7.5 billion in revenue from this business in fiscal year 2027 strengthens the buying case by confirming the conversion of Silicon One and optics demand into a tangible revenue contribution.
▼ Negative: Generating less than $7.5 billion in revenue from this business in fiscal year 2027 strengthens the selling case by calling into question the extent of conversion from large orders into sales.

What does Splunk add to the investment case for CSCO?

Splunk added more than 280 new customers in quarter 4 of fiscal year 2026 (ended 2026-07-25), and exceeded its target of 1000 new customers for fiscal year 2026. Cisco is working to integrate its solutions into security offerings and agreements covering a broader range of the company's products. However, management explained that large, on-premises, longer-duration Splunk deals helped lift quarterly security revenue growth to 14% compared with the same quarter of the previous fiscal year. The sustainability of this contribution therefore depends on broader demand and adoption, with high-single-digit security growth expected during fiscal year 2027.

Do Cisco's cash flows cover its earnings, and what does its debt look like?

Operating cash flow according to EL7 data was approximately $14.2 billion for the last 12 months through 2026-07-25, versus net income of $13.3 billion, representing a cash conversion ratio of 107%. Free cash flow as calculated by EL7 (operating cash flow minus capital expenditures) for the last 12 months through 2026-07-25 was approximately $10.6 billion. In quarter 4 of fiscal year 2026 (ended 2026-07-25), total debt according to EL7 data was approximately $29.5 billion versus cash and short-term investments of $7.2 billion. This comparison is limited to cash and short-term instruments, and excludes long-term marketable securities.

What should be monitored in Cisco's earnings announcement expected on 2026-11-11?

Cisco is expected to announce earnings on 2026-11-11, providing a test of its guidance for quarter 1 of fiscal year 2027. Management targets revenue between $18 billion and $18.2 billion and adjusted earnings per share between $1.32 and $1.34 for this quarter. The targeted adjusted gross margin between 65% and 66% warrants particular attention because of the greater hardware share and memory costs. The company's updates on its $7.5 billion AI revenue target for fiscal year 2027 will also help assess the conversion of demand into sales.

Company Profile