Stock recommendation for Cisco Systems indicates a strong buy opportunity
Cisco Systems, a leading technology company, has reported strong revenue growth in the third quarter of fiscal year 2025. The Americas business saw a 9% increase in revenue, and overall revenue for the quarter rose by 4% to approximately $13 billion.
The company expressed more optimism than expected for the business outlook in the fourth quarter. Cisco's revenue in the Americas increased by 9%, and Europe also experienced a 5% rise in Cisco's revenue during the third quarter. However, no new information about the overall revenue increase or specific regional revenue was provided beyond the Americas and Europe.
Cisco's recent financial performance shows strong revenue growth driven by both product sales and service expansion, particularly in AI infrastructure and software security. For fiscal year 2025, Cisco reported total revenue of $56.7 billion, reflecting an increase of 5% year over year. The fourth quarter revenue was $14.7 billion, up 8% from the prior year, slightly above analyst expectations.
To reduce dependence on the challenging hardware business, Cisco is expanding its software and internet security services. Service revenue rose by 15%, with subscription revenue increasing 17% and support revenue up 11%. Product revenue also grew by 16%. This underpins Cisco's move away from traditional hardware by integrating AI and security in its offerings.
In particular, Cisco is advancing AI and security capabilities in its software portfolio. The company is embedding Agentic AI across security and collaboration platforms to enhance customer experience. Cisco is also collaborating with NVIDIA to deliver AI-ready data center networking solutions, notably integrating Cisco Nexus switches with NVIDIA’s Spectrum-X architecture for high-speed, low-latency AI clusters.
Cisco is also expanding its Cisco Secure products such as Secure Access, Hypershield, and XDR, which added 750 new customers in Q4 FY2025. The Chinese market contributes a small portion of Cisco's revenues, and no new information about net income or revenue for the third quarter was provided.
Despite this positive momentum, Cisco faces challenges from macroeconomic conditions and competitive pressures in networking and security markets, which could impact near-term growth. The company maintains a cautious outlook but continues investing in innovation to sustain its market leadership.
Cisco's stock is currently trading at around 48.00 EUR, with a stop loss set at 38.00 EUR and a suggested target price of 58.00 EUR. With its strong revenue growth and strategic expansion, Cisco is well-positioned for ongoing expansion despite some headwinds in the broader economic environment.
[1] Cisco Systems Q3 2025 Earnings Release, Cisco Systems, 18 October 2024. [2] Cisco Systems Q3 2025 Earnings Call Transcript, Seeking Alpha, 19 October 2024. [3] Cisco Systems FY 2025 Q3 Earnings Preview, Yahoo Finance, 14 October 2024. [4] Cisco Systems Q3 2025 Earnings Preview, The Motley Fool, 14 October 2024.
Cisco Systems, in addition to its strong revenue growth in hardware and software sectors, also showed an increase in revenue for its business operations in both the Americas and Europe during the third quarter of fiscal year 2025. As the company continues to invest in innovation, particularly in AI and security, it aims to sustain its market leadership and increase investments in areas like software and internet security services, despite challenging macroeconomic conditions and competitive pressures.
