Cisco’s AI Revenue Opportunity Is ‘Immense and Growing Quickly,’ Says Morningstar — CEO Touts A ‘Networking Supercycle’

Morningstar expects Cisco’s hyperscaler AI revenue to reach $7.5 billion in fiscal 2027, citing a healthy revenue backlog after bagging $9.3 billion in AI infrastructure orders.

• Morningstar said Cisco is “converting AI demand into revenue faster than anticipated,” with AI infrastructure orders creating a backlog that should begin flowing through revenue in the coming year.
• The firm expects Cisco’s AI revenue to rise toward $20 billion, or about 20% of sales, by the end of the decade, compared with $1 billion, or 2% of sales, in fiscal 2025.
• Morningstar expects Cisco to generate 10% compound annual growth through fiscal 2030, with its core networking business, including services, growing at an annualized rate of 15% over the next five years.

Cisco Systems Inc. (CSCO) is seeing its artificial intelligence roadmap expand rapidly, with Morningstar calling the company’s AI revenue opportunity “immense and growing quickly” as demand for AI networking continues to build.

In a note following Cisco’s fourth-quarter (Q4) results, Morningstar said that it expects the company’s hyperscaler AI revenue to reach $7.5 billion in fiscal 2027, citing a healthy revenue backlog after bagging $9.3 billion in AI infrastructure orders during fiscal 2026.

Cisco shares were down nearly 6% in Thursday’s pre-market trade. CSCO was among the top trending tickers on Stocktwits at the time of writing.

Morningstar Optimistic On CSCO’s AI Outlook

Morningstar said Cisco is “converting AI demand into revenue faster than anticipated,” with AI infrastructure orders creating a backlog that should begin flowing through revenue in the coming year.

“Cisco’s AI revenue opportunity is immense, and growing quickly,” Morningstar said, adding that AI should raise the company’s overall growth profile.

The firm expects Cisco’s AI revenue to rise toward $20 billion, or about 20% of sales, by the end of the decade, compared with $1 billion, or 2% of sales, in fiscal 2025.

Morningstar also pointed to strength outside AI, highlighting that Cisco’s campus orders grew 20% as customers refreshed aging infrastructure, and the firm expects AI workload growth to continue supporting enterprise network refresh demand.

Morningstar expects Cisco to generate 10% compound annual growth through fiscal 2030, with its core networking business, including services, growing at an annualized rate of 15% over the next five years.

The firm maintained its $115 fair value estimate for Cisco, saying the latest quarter reinforced its view that AI is becoming a strong tailwind for the networking business.

Wall Street Gets More Bullish On CSCO’s AI, Networking Outlook

According to TheFly, Wells Fargo analyst Aaron Rakers raised the firm’s price target on Cisco to $150 from $130 while maintaining an ‘Overweight’ rating, saying the company’s strong Q4 results and fiscal 2027 guidance should provide confidence in the networking supercycle.

The firm also pointed to momentum in Cisco’s Silicon One and Acacia businesses, as well as supply-chain execution, and expects continued upside to Cisco’s top and bottom lines through fiscal 2027.

Morgan Stanley also raised its price target to $135 from $130 and maintained an ‘Overweight’ rating. The firm said Cisco is seeing broad-based strength across core enterprise and hyperscaler AI, with improving share momentum as supply-chain challenges ease.

Morgan Stanley noted that the faster hardware mix is expanding gross-margin pressure into fiscal 2027.

CSCO Results At A Glance

Cisco CEO Chuck Robbins said during a post-earnings call that the company believes the accelerating adoption of agentic AI is fueling a “networking supercycle” as customers invest in infrastructure to handle rising AI traffic and costs across cloud, on-premise and edge environments.

Robbins said Cisco’s hyperscale business is expected to generate $7.5 billion in AI infrastructure revenue in fiscal 2027. He also pointed to more than $1 billion in AI infrastructure orders from neocloud, sovereign and enterprise customers during fiscal 2026, adding that the company believes it is in the “early stages of a networking super cycle.”

Cisco reported earnings per share (EPS) of $1.22 on revenue of $17.3 billion in Q4, compared to Wall Street estimates of an EPS of $1.17 on revenue of $16.83 billion, according to Fiscal.ai data.

The company expects an EPS of $5.05 to $5.11 in fiscal year 2027, while the consensus estimate stood at $4.8. It expects revenue of $72.2 billion to $73.4 billion, while the consensus stood at $68.8 billion.

What Retail Traders Think Of CSCO Stock

Retail sentiment on Stocktwits around Cisco trended in the ‘extremely bullish’ territory with message volumes at ‘extremely high’ levels at the time of writing.

CSCO stock is up 61% year-to-date and 74% over the past 12 months. The S&P 500 ETF (SPY) is up 20% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 25%.

The Vanguard Information Technology Index Fund ETF (VGT) is up 38% during this period, while the State Street Technology Select Sector SPDR ETF (XLK) is up 41%.

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