Let’s take a look at Cisco Systems (CSCO)’s valuation given the increased attention to AI and cybersecurity

Cisco Systems (CSCO) is attracting new investor attention following a series of AI-related announcements, including increased AI infrastructure revenue, an upcoming COMPUTEX 2026 keynote, new cybersecurity partnerships, and the company’s role in the multi-company Project Glasswing initiative.

Check out our latest analysis for Cisco Systems.

Recent AI announcements and cybersecurity partnerships seem to be fueling strong momentum, with a one-month price return of 11.15% and a one-year total shareholder return of 58.24%, indicating growing optimism rather than diminishing interest.

If Cisco’s AI push catches your eye, it might be time to see what else is moving in a related space and check out these 38 AI Infrastructure stocks.

With Cisco stock up 58.24% over the past year and trading just 3% below analysts’ average price target, the key question now is: Is there still a buying opportunity here, or is the market already pricing in future growth?

Most popular story: 3.1% underrated

With a trailing closing price of $86.25 and a narrative fair value of approximately $89.04, Cisco is believed to be moderately undervalued, and that view hinges on specific growth and margin assumptions as well as recent stock price momentum.

Higher adoption of subscription-based software products, as evidenced by recurring product revenue (ARR up 8% and subscription revenue at 54% of total), signals Cisco’s transition to a higher margin and more predictable revenue model, which is expected to improve net income stability and support long-term earnings growth.

Read the whole story.

Curious what kind of earnings runway and margin profile its fair value includes, and how its earnings power is modeled through the next cycle? The full explanation details the growth mix behind this 3.1% gap, the recurring software tilt, and multiple assumptions about the valuation.

Result: Fair value $89.04 (undervalued)

Read the full explanation to understand what’s behind the predictions.

However, this will depend on Cisco’s ability to maintain large-scale AI infrastructure customer spending at expected levels and manage memory cost pressures that could weigh on its 66% gross margin outlook.

Learn about the key risks to this Cisco Systems story.

Another way to look at it: DCF suggests slight overvaluation

While the narrative model shows an underestimation of about 3.1%, the SWS DCF model paints a slightly different picture. Based on this framework, Cisco’s $86.25 is slightly above the estimated future cash flow value of $85.75, representing a slight premium rather than a discount. The question for you is whether you should rely more on the earning power story or the cash flow calculations when there is only a small difference.

Find out how the SWS DCF model arrives at fair value.

Simply Wall St runs discounted cash flows (DCF) on every stock in the world every day (check out Cisco Systems, for example). The entire calculation is fully illustrated. Track your results with a watchlist or portfolio and get alerts when they change, or use our stock screener to discover 59 high-quality undervalued stocks. When you save your screener, you’ll also get alerts when new companies match, so you never miss out on potential opportunities.

next step

A sentiment that balances opportunity and caution allows you to act quickly, review the underlying data, and decide where you stand. Let’s take a closer look at three key perks to see what’s currently exciting more optimistic investors.

Looking for more investment ideas?

If Cisco is already on your radar, don’t stop there. An extensive watchlist of quality ideas can help you spot opportunities before the crowds arrive.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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