By Nate Wolf

Quality tech names such as Cisco Systems have largely been an afterthought in an artificial intelligence race headlined by flashy growth stocks. But Cisco is now poised to claim a piece of the AI pie, analysts at UBS said.

The investment bank upgraded Cisco stock to Buy from Neutral and lifted its price target to $88 from $74 in a weekend research note. The 40-year-old technology company will benefit from growing demand for networking infrastructure fueled by AI, UBS argued.

Cisco shares ticked up 1.9% to $74.49 on Monday. The stock is up 25% this year -- hardly a laggard -- but its AI story may be going under the radar.

The company shifted strategy around eight years ago to meet the needs of large cloud providers, wrote UBS lead analyst David Vogt. That decision is beginning to bear fruit, in large part due to AI. Cisco secured more than $2 billion in AI orders in fiscal 2025, UBS noted, mainly from hyperscalers running its Silicon One switch architecture.

That may not sound like much, but bear in mind Cisco brought in zero AI back end system revenue as recently as five quarters ago.

UBS projects overall data center capital expenditures to grow 20% in 2026 and 2027, and network infrastructure should account for around 15% of every dollar spent on data center capex. That dynamic means Cisco's overall market is expanding.

"Our checks suggest its products are experiencing continued demand momentum in the AI back-end portion of networks," Vogt said.

At the same time, Cisco's campus networking business remains the dominant player in the space, capturing around 60% of market share outside China. The campus market typically has a product refresh cycle every eight to nine years, UBS noted, and Cisco's Catalyst 9000, or Cat 9K, switch lineup was introduced nine years ago in 2016.

"Cisco's Campus business is poised to grow at least as fast but likely faster than the industry over the next several years given the aging installed base of legacy Campus equipment including Cat 4K, Cat 6K, and Cat 9K," Vogt argued.

UBS expects Cisco's revenue growth in fiscal 2026 to exceed the company's current 4% to 6% guide.

The firm isn't alone: Of the 25 analysts polled by FactSet, 14 rate Cisco stock a Buy or equivalent. That said, the $88 price target from UBS is now the highest on Wall Street, where the average target is $77.50.

Cisco reports fiscal first-quarter earnings on Nov. 12.

Write to Nate Wolf at nate.wolf@barrons.com

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November 03, 2025 13:11 ET (18:11 GMT)

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