Rosenblatt upgrades Cisco on strong AI, subscription growth

Investing.com -- Rosenblatt Securities upgraded Cisco Systems Inc (NASDAQ: CSCO) to "Buy" and raised its price target to $80 given strong subscription growth, increasing AI-driven orders, and robust recurring revenues.

Cisco reported second-quarter revenue of $14.0 billion, up 9% with earnings per share of $0.94, exceeding analyst estimates. Total (EPA:TTEF) product orders rose 29%, driven by strength in service provider and cloud segments.

The firm noted double-digit growth in annual recurring revenue and remaining performance obligations, with subscriptions making up 56% of total revenue. AI infrastructure orders with web-scale customers surpassed $350 million in the quarter, putting Cisco on track to exceed $1 billion in AI-related orders for fiscal 2025.

Rosenblatt noted "triple-digit growth" in web-scale orders and over 20% growth in telecom orders, with security revenues and orders more than doubling year-over-year. Cisco also reported early AI-related orders from enterprise customers.

While the firm acknowledged potential risks, including tougher year-over-year comparisons and potential weakness in U.S. public sector spending, it believes Cisco's strong AI momentum and recurring revenue growth justify the upgrade.

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