If you purchased Cisco Systems on March 27, 2000, you are finally complete. After nearly 26 years in the wilderness, Cisco’s stock price has soared above the intraday highs of the dot-com bubble, ending a long chapter in what was once the ultimate symbol of the age of internet excess. The stock price surpassed the record closing price achieved last year. Recovery took a long time. After peaking in March 2000, Cisco’s stock price plummeted nearly 90% with the bursting of the dot-com bubble, ultimately closing at a split-adjusted $8.60 on October 8, 2002. Cisco today bears little resemblance to the hardware-centric growth engine that briefly made it the world’s most valuable company at the height of the Internet craze. Cisco is now increasingly oriented toward software and services, closely tied to the artificial intelligence boom, and has become a cash-generating company. While networking hardware remains its foundation, the company now sells a growing suite of software and services across cybersecurity, observability, and cloud management. This shift was further enhanced by the approximately $28 billion acquisition of Splunk, which Cisco positions as the foundation for its data monitoring and security analytics efforts. Cisco is also committed to deeply embedding itself into AI data center architectures. The company recently introduced new Ethernet switches built on Nvidia silicon. It’s a move aimed at further integrating the company’s networking gear into large-scale AI systems. Cisco announced in November that AI infrastructure orders from hyperscaler customers reached $1.3 billion, “reflecting a significant acceleration in growth.” expensive? Still, some investors are wary of how much optimism is already priced into the stock. “I applaud the company for reasserting itself in the age of AI, but I think the stock is overvalued,” said Paul Meeks, a veteran technology investor and head of technology research at Freedom Capital Markets. Meeks said the company’s price-to-earnings ratio of about 20 times this year and 18 times next year already priced in more growth than Cisco expects, and that earnings are expected to grow only about 8% a year, below the expected pace of the S&P 500. Investors currently participating are effectively betting that Cisco will beat Wall Street expectations in its next two quarterly reports starting Feb. 11, he said. To be sure, Cisco’s multiple is still a fraction of the roughly 126 times expected earnings that investors were willing to pay in the first quarter of 2000, when Cisco last hit an all-time high, according to data compiled by FactSet. UBS Defense Technology analysts recently named Cisco a “non-consensus top pick,” arguing that the market still treats the company as an “AI loser” with only mid-single-digit revenue growth. According to UBS’s supply chain research, AI-related orders in fiscal 2026 will increase by more than $4 billion from approximately $2 billion in fiscal 2025. This demand could outpace profits and lead to an upward revision of Cisco’s 2026 outlook, with revenue growth in the low single digits and EPS growth approaching double digits, UBS said. Evercore ISI beat Cisco last week, raised its price target to $100 from $80, and said a resurgence in core networking as AI demand accelerates should allow the company to maintain high-single-digit revenue growth and low-teens EPS growth for several years. The $100 price target represents a 22% upside from current levels of around $82. Wall Street firms called Cisco an attractive “defensive technology” and said EPS could exceed $5 and the valuation could move towards 20x. — With assistance from CNBC’s Nick Wells.
