Cisco Systems (NASDAQ: CSCO) rarely makes the front page of fintech X, formerly Twitter, yet the 40‑year‑old networking giant has quietly engineered one of its strongest growth spurts in a decade.
Revenue jumped 11 % year over year to $14.1 billion last quarter, well above management’s guidance, while non‑GAAP EPS climbed to $0.96 from $0.88 a year earlier.
That strength wasn’t a one‑off. Management now forecasts full‑year fiscal 2025 revenue at roughly $56.6 billion and non‑GAAP EPS at about $3.78, implying the highest annual profit in Cisco’s history if the Q4 guidance range is met.
At roughly $69 a share, investors are paying about 18x forward earnings, a reasonable multiple for a company that throws off $14 billion in free cash flow a year and just raised its dividend for the 13th consecutive year to $0.41 per quarter, or a 2.4 % yield.
What Is Being Overlooked?
Cisco still sits on an order backlog estimated at more than $11 billion, roughly 20 % of projected FY 2025 sales even after working it down aggressively since the 2020-21‑era supply crunch.
That backlog acts like a hidden reserve of revenue that will dribble into reported numbers over the next three to four quarters, offering a cushion if enterprise spending wobbles. Management discloses backlog totals on the earnings call Q&A, but the figure is easy to overlook because it never appears on the income statement.
Another interesting tidbit that few know is that Cisco’s Chennai plant is now the sole global source of its NCS 540 routers, gear used by telecom carriers to connect 5G cell sites.
CEO Chuck Robbins recently called India the fastest‑growing market in his portfolio and hinted that the site might well become a strategic export hub. If supply chains nudge away from China, Cisco’s early investment might well translate into both cost leverage and market‑share wins in Asia‑Pacific.
When Cisco set a seemingly modest $1 billion sales goal for AI infrastructure this fiscal year, Wall Street yawned but perhaps it shouldn’t have.
Orders tied to Silicon One‑based Ethernet for GPU clusters hit $600 million in Q3 alone, pushing cumulative FY 2025 bookings past that $1 billion mark a quarter early.
Outside analysts now estimate AI‑related product revenue could top $1.6 billion for the full year, enough to add more than a percentage point to Cisco’s organic growth rate.
The “Splunk Lift” Has Only Started
Cisco’s $28 billion purchase of Splunk closed in March 2024. Seven quarters later, Splunk is doing exactly what management promised by supercharging the security segment.
Security revenue doubled to $2 billion last quarter. Strip Splunk out, and Cisco’s total revenue would have declined 14 %. In other words, Splunk has already swung the company from contraction to double‑digit growth.
The part most people haven’t internalized is what that means for recurring revenue. More than 55 % of Cisco’s software segment is now sold as multi‑year subscriptions, and Splunk pushes that ratio even higher. As those contracts roll on, visibility into cash flow improves, just the sort of trait that tends to earn a valuation premium in choppy markets.
Quantum Networking Is Optionality the Market Ignored
In May Cisco unveiled a prototype “entanglement” chip that can generate a million photon pairs per second at room temperature, an order of magnitude faster than prior designs.
The company simultaneously opened Cisco Quantum Labs in Santa Monica. Near‑term, the chip’s precision‑timing feature has already attracted interest from Wall Street trading desks that need nanosecond‑level synchronization.
Long term, the technology could knit small quantum processors into massive distributed machines, positioning Cisco as the router maker for the quantum internet.
Will quantum move the stock in 12 months? Probably not, commercialization is still years out. But optionality matters. Alphabet trades at 19× earnings largely on the promise that “other bets” like Waymo and DeepMind might pay off. Cisco’s quantum program offers a similar moonshot that few models capture today.
Valuation Check 2026
What’s Going To Move Cisco Stock?
On August 13, FY 2025 results and FY 2026 outlook are announced and history shows management has beaten guidance five quarters in a row; another beat‑and‑raise could reset consensus targets.
The first‑ever Indian venue spotlights Cisco’s fastest‑growing geography and could surface fresh product wins in 5G and government networks.
Another catalyst could be Investor Day. After all, the last one led to a three‑point increase in the software revenue mix target, which immediately fed into higher long‑term margin models. Expect updated mid‑cycle financial goals that incorporate Splunk.
Cisco returned $9.6 billion to investors in dividends and buybacks through the first three quarters of FY 2025, more than 4 % of its market cap. Continuation at that pace automatically tightens the float and supports EPS.
Risks Worth Respecting
Roughly 40 % of Cisco’s product revenue still comes from campus and branch networking that correlates with business confidence. A recession would hit orders hard so keep a close eye on this pitfall.
Splunk is the biggest deal in Cisco’s history. Early signs look good, but large‑scale integrations often stumble in year two when cost synergies and culture clashes surface.
The competitive environment is worth keeping an eagle eye on too because Arista still dominates Ethernet switches inside hyperscaler data centers, and Juniper (now under HPE) is leaning heavily into AI fabrics. Winning AI clusters is not a foregone conclusion.
Finally, the Securities and Exchange Commission has floated stricter cybersecurity‑disclosure rules, and any Splunk‑tracked breach inside Cisco’s vast customer base could trigger negative headlines.
Where Will Cisco Stock Be In 1 Year?
A reasonable 12‑month target sits around $75 based on roughly 9 % capital appreciation plus a growing dividend.
Cisco doesn’t need a heroic narrative to edge higher over the next year. At 18× forward earnings, a 2.4 % dividend, and an active buyback, steady execution is enough to push the shares to the low‑$70s.
The hidden levers are AI networking that’s already beating internal targets, quantum networking that could command a standalone multiple, and Splunk’s conversion of one‑time licenses into recurring cloud revenue—tilt the risk/reward skew to the upside.
And if Silicon One or quantum networking lands a whale‑size design win, the bull case of $85 per share suddenly comes into play.
Sometimes the most exciting stories hide in plain sight on the enterprise network. Cisco’s next routers may be wiring supercomputers and quantum nodes rather than cubicles and that’s a future the current share price barely discounts.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.