Key Takeaways:
Cisco Systems has become one of 2026's surprise mega-cap winners, up 52.76 percent year to date on an AI infrastructure order book that expands each quarter.
24/7 Wall St. rates Cisco a buy with a $135.69 price target, implying 16.98 percent upside from the current $115.99 share price.
"Cisco delivered record quarterly revenue in Q3 and we saw very strong, broad-based demand for our products, demonstrating the relevance of our technology for connecting and securing AI," Chuck Robbins, chief executive officer at Cisco, said.
Q3 FY26 revenue reached $15.84 billion, up 12 percent year over year, with non-GAAP EPS of $1.06 beating consensus and net income up 35.41 percent. Management raised FY26 AI order guidance to $9 billion from $5 billion and AI revenue to $4 billion from $3 billion. Total product orders grew 35 percent year over year, with data center switching orders up more than 40 percent.
Shares trade just below the 52-week high of $129.88, well off the $64.42 low. The bull case targets $141.49, or 21.98 percent upside, while the bear case implies $112.38. Q4 FY26 revenue is guided to $16.7 billion to $16.9 billion, with the earnings report as the next event to watch.
Cisco's forward P/E of 24 sits well below Arista Networks' 47, which carries a 42.7 percent operating margin. Hewlett Packard Enterprise offers a forward P/E of 12 but with just 8.7 percent operating margins. Cisco's 25 percent operating margin and 25.2 percent return on equity justify the premium to HPE and support a move toward Arista's multiple.
Silicon One design wins are compounding, and Acacia optics delivered more than $1 billion in Q3 orders. Preliminary FY27 guidance calls for at least $6 billion in AI hyperscale revenue. The analyst consensus stands at $130.23 with 17 buy ratings.
Non-GAAP gross margin compressed 260 basis points year over year to 66 percent in Q3 on hardware mix shift and memory costs. Services revenue slipped 1 percent, and hyperscaler AI order timing is nonlinear. Insider activity skewed toward selling, and the trailing P/E of 38 leaves little margin for error.
The 24/7 Wall St. model projects Cisco at $150 by 2027, $165 by 2028, $178 by 2029, and $190.77 by 2030, assuming FY27 AI hyperscale revenue lands at or above the $6 billion preliminary guide and non-AI growth stays in the 4 percent to 6 percent band.
The buy rating with 90 percent confidence reflects a company that moved from perpetual show-me story to legitimate AI infrastructure leader. Investors will watch Q4 earnings for hyperscaler order trajectory and gross margin stability.
This article is for informational purposes only and does not constitute investment advice.
