Cisco Bets on New Portfolio to Reignite Security Growth: What's Ahead?

Cisco Systems CSCO is expanding its portfolio to boost Security revenues, which dropped 4% year over year to $2.01 billion in the second quarter of fiscal 2026. Customers are shifting to cloud subscriptions from on-premise deals for Splunk, and lower revenues from prior generation products are negatively impacting top-line growth.

Cisco’s new and refreshed products, which comprise roughly one-third of its security portfolio, are expected to help revive top-line growth. Solutions like SecureAccess, XDR, Hypershield, AI Defense and refreshed firewalls are driving order growth. In the second quarter of fiscal 2026, Cisco saw double-digit growth in demand for next-gen firewalls, and roughly 4,000 customers have purchased a new product since launch.

For Secure Access, Cisco booked more than 2.5 million users in the fiscal second quarter, and more than 50% of added customers were new logos. As the adoption of AI tools grows and Agentic AI increases at the network edge, the company expects to see continued momentum in the SASE business, including Secure Access and SD-WAN. Splunk continued to win new customers in the reported quarter, reaching 500 new logos for the first half of fiscal 2026 and is on track to add 1,000 new logos for the year.

An expanding portfolio is driving clientele. At Cisco Live Amsterdam, the company unveiled major AI defense and SASE advancements to help secure organizations as AI agents enter the workforce. Cisco SASE has launched a new semantic inspection engine that can evaluate the intent of Agentic interactions and block sophisticated, context-dependent threats. The company made AgenticOps the operating model for AI-driven IT to enable autonomous troubleshooting, continuous optimization and trusted validation.

Cisco is infusing security into the core of Secure AI Factory with NVIDIA. This helps enterprises safeguard their AI platforms and services not only from external threats but from rogue agent behavior. Cisco Hybrid Mesh Firewall delivers consistent security policies across a diverse set of enforcement points, including network switches, workload agents and more.

CSCO Faces Tough Competition in the Security Domain

Cisco is facing stiff competition from Fortinet FTNT and Okta OKTA in the security domain.

Fortinet's AI-powered security operations business is accelerating rapidly. The company powers more than 20 AI-driven solutions through its FortiAI technology across three main areas: FortiAI-Protect for secure AI usage, FortiAI-Assist for AI-assisted operations and FortiAI-SecureAI for secure LLM and AI systems. With more than 500 issued and pending AI patents, Fortinet is well-positioned to capitalize on growing AI security demand. The company launched its Secure AI Data Center solution, the industry's first end-to-end framework specifically designed for AI workloads, delivering high-capacity connectivity and up to 69% lower energy consumption than alternative solutions.

Okta’s offerings include Okta AI, a suite of AI-powered capabilities embedded across several products, which empowers organizations to harness AI to build better experiences and protect against cyberattacks. The company benefits from strong demand for its new products, including Identity Governance, Privileged Access, Device Access, Fine Grained Authorization, Identity Security Posture Management and Identity Threat Protection with Okta AI. Okta expects revenues between $3.17 billion and $3.19 billion for fiscal 2027, indicating year-over-year growth of 9%.

CSCO Share Price Performance, Valuation & Estimates

Cisco shares have gained 27.4% in a year, outperforming the broader Zacks Computer and Technology sector’s growth of 25.8%.

CSCO Stock Beats Sector

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The CSCO stock is trading at a premium, with a trailing 12-month price/book of 6.43X compared with the industry’s 6.13X. Cisco has a Value Score of F.

CSCO Stock Is Overvalued

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The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.3% growth from the figure reported in the year-ago quarter.

Cisco Systems, Inc. Price and Consensus

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Cisco currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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