Bank of America upgrades Cisco (CSCO.US) to "buy" on AI opportunities

Analyst Arti Malik of Bank of America raised his rating on Cisco Systems (CSCO.US) from "neutral" to "buy" and raised his price target from $52 to $62, based on his bullish view on the opportunities in the AI field. Although AI currently accounts for only 2% of Cisco's revenue, Malik believes it has the potential to contribute more. With the rise of AI technology, investors are expected to favor network equipment stocks, which will benefit Cisco's valuation. As of writing, Cisco's stock price rose 1.8% in pre-market trading. In addition, Malik raised his earnings expectations for Cisco's fiscal 2025 and 2026 by 2% and 5%, respectively. He expects Cisco's upcoming quarterly earnings, which are scheduled to be released on November 13, could serve as a "potential catalyst" for the stock, especially considering Cisco's recent inclusion in Meta's (META.US) AI hardware portfolio. He emphasized that while the market may be concerned about the threat to Arista Networks' (ANET.US) market share, he believes it is more of a recognition of Cisco's technology. It is worth noting that analysts generally expect Cisco's EPS for the next quarter to be $0.87 and revenue to be $13.77 billion.