The stock of technology giant Cisco Systems (CSCO) has received a big upgrade from analysts at Citigroup (C).
Analysts at Citi raised their rating on CSCO stock to Buy from Neutral and lifted their price target on the shares to $62 from $52. In a note to clients, the analysts said that Cisco Systems, which sells networking hardware, software, and telecommunications equipment, should benefit from the widespread adoption of artificial intelligence (AI) moving forward.
Citigroup said that although AI currently accounts for only 2% of Cisco’s revenues, the company should see strong growth in coming years as its ethernet switches are increasingly used to connect AI microchips and processors. Cisco is a leading supplier of ethernet switches that connect computers, routers, and servers to local area networks.
Growth from AI
Cisco Systems has forecast an additional $1 billion in AI orders in its current fiscal year. In August, Cisco said it was seeing strong demand for networking equipment and announced a plan to focus more on AI, as well as cybersecurity, two areas where it sees future growth opportunities.
The upgrade from Citigroup contributed to a 4% gain in CSCO stock on October 16. That increase is sure to be welcome news to Cisco shareholders who have had to watch as the stock trailed the broader market throughout the year. So far in 2024, Cisco Systems stock has risen 15%, behind the 22% gain in the benchmark S&P 500 index.
Is CSCO Stock a Buy?
Cisco Systems stock has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on nine Buy and eight Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average CSCO price target of $57.87 implies 2.64% upside from current levels.
