Cisco's Earnings Crossroads: Why Analysts Are Bullish Ahead of Q3 2025

Cisco Systems (CSCO) stands at a pivotal moment as it prepares to report fiscal third-quarter earnings on May 14, 2025. Analysts are closely watching the networking giant’s progress in key growth areas like AI infrastructure and quantum computing, which could solidify its position in the tech landscape. Here’s what investors need to know.

The Earnings Catalyst: Growth Amid Challenges

Cisco’s Q3 2025 earnings (covering April 2025) are expected to show steady momentum. Analysts project $0.92 EPS and $14.05 billion in revenue, both slightly above year-ago figures. This follows a strong Q2 performance, where Cisco beat estimates with $0.94 EPS and $14.0 billion in revenue, fueled by AI order bookings and cybersecurity sales.

The company’s guidance for fiscal 2025 remains ambitious: revenue between $56.0 billion and $56.5 billion, with EPS projected to climb to $3.68–$3.74. Analysts emphasize that executing this growth while navigating macroeconomic uncertainty will be critical.

Analysts Lean Bullish: Price Targets Reflect Optimism

The consensus is shifting toward a “Moderate Buy” (with 13 “Buy” ratings, 1 “Hold,” and no “Sells”), reflecting growing confidence in Cisco’s long-term strategy. The average price target of $68.33 implies a 14.3% upside from current levels ($59.77), while the highest target ($80.00) suggests potential upside of 34% if AI and quantum efforts accelerate.

Notable calls include:
- Rosenblatt Securities: Maintained a “Buy” with an $80 target, citing breakthroughs in quantum computing and AI.
- New Street Research: Hiked its target to $75, citing Cisco’s leadership in AI infrastructure.
- Wells Fargo: Raised its target to $72, highlighting strong AI order momentum.

Growth Drivers: AI and Quantum Computing Lead the Way

Analysts are particularly bullish on Cisco’s AI infrastructure and quantum computing initiatives:
- AI Orders: AI-related bookings hit $350 million in Q2, contributing to a $700 million total for the first half of fiscal 2025. This aligns with Cisco’s goal of deriving 25% of revenue from AI by 2027.
- Quantum Computing: Cisco’s announcement of a quantum chip capable of 5–10 years to commercialization has drawn praise from firms like Evercore ISI and J.P. Morgan.

These areas are key to Cisco’s differentiation in a competitive market, where rivals like Qualcomm (QCOM) and Hewlett Packard Enterprise (HPE) are also vying for AI and cloud dominance.

Risks Lurking Beneath the Surface

Despite optimism, risks remain:
- Economic Headwinds: A potential slowdown in enterprise spending could pressure networking infrastructure sales.
- Margin Pressures: Competing on cutting-edge tech requires heavy R&D investment, which could strain margins.

Conclusion: A Buy with an Eye on Innovation

Cisco’s Q3 earnings report will be a litmus test for its growth narrative. With $80 billion in market cap and a 26x trailing P/E ratio, the stock is priced for success—but analysts’ optimism is justified.

The average price target of $68.33 reflects a balanced view: while risks exist, Cisco’s AI and quantum bets are high-impact and underappreciated. Investors should watch for:
- Revenue growth: Consistency in hitting $14 billion+ quarters.
- AI/Quantum updates: Details on commercialization timelines and order trends.
- Margin stability: Ensuring R&D spending doesn’t erode profitability.

If Cisco delivers on its guidance, the stock could outperform—not just in 2025 but as a long-term play in the AI-driven tech revolution. For now, the analysts’ “Buy” consensus and 14% upside target suggest this is a name to watch closely ahead of May’s earnings.