Cisco Systems: Reiterate Buy After Strong Q4 Earnings

Cisco Systems reported steady Q4 earnings results, prompting a reiteration of a "Buy" rating. The company's performance comes after a year of solid growth, according to the finance expert with experience at Bloomberg. The expert believes Cisco is a solid investment opportunity despite previous concerns.

Cisco Systems Inc. (NASDAQ:CSCO) reported its fiscal Q4 ’25 earnings after the market closed on Wednesday, August 13, 2025. The company's performance was in line with analyst expectations, prompting a reiteration of a "Buy" rating by financial experts. The earnings came after a year of solid growth, according to a finance expert with experience at Bloomberg.

The company reported adjusted earnings per share (EPS) of $0.98 on revenue of $14.6 billion, meeting analyst expectations [1]. The results marked a 13% year-over-year (y-o-y) growth in EPS, a 7% increase in operating income, and a 14% rise in revenue. These figures were slightly better than the previous quarter's guidance.

Cisco’s non-GAAP operating margin also came in about 150 basis points (bps) better than expected, leading to a bump in forward EPS and revenue estimates. The company's AI revenue, which was $1 billion in fiscal Q3 ’25, is expected to continue growing, although it remains relatively small compared to the company's overall revenue [2].

The company's acquisition of Splunk (NASDAQ:SPLK) will be included in Cisco's organic numbers for fiscal Q4 ’25. Splunk's inclusion is expected to bolster Cisco's cybersecurity offerings and potentially drive organic growth in the security segment [1].

Looking ahead, Cisco is expected to report $14.6 billion in revenue and $4.9 billion in operating income for fiscal Q1 ’26, with EPS expected to be $0.97. These figures suggest a slower growth rate compared to the previous quarter, with expected y-o-y growth of 6%, 4%, and 7% respectively [1].

Cisco's stock has seen a 21% year-to-date (YTD) increase, trading at 17x expected fiscal ’26 earnings with an expected 6% growth rate in EPS next year. The stock's valuation remains reasonable, given its 4% to 5% free-cash-flow yield [1].

Despite its slow historical growth, Cisco has shown signs of improvement, particularly in its AI infrastructure orders. The company's AI infrastructure orders have surged past $600 million, outpacing prior run rates and indicating a strong demand for AI infrastructure [3].

The stock experienced a 2% decline in after-hours trading following the earnings report, but it has added nearly a fifth of its value in 2025 through Wednesday’s close [2].

From a portfolio construction standpoint, Cisco remains a non-correlated name, making it a suitable addition for a longer-term, patient investor. The company's ability to capitalize on AI infrastructure and cybersecurity trends could drive future growth.

References:
[1] https://www.investing.com/analysis/cisco-earnings-preview-splunk-acquisition-impact-on-q4-results-200665214
[2] https://www.investopedia.com/cisco-ceo-sees-massive-opportunity-as-ai-infrastructure-orders-grow-11790481
[3] https://www.investing.com/analysis/cisco-earnings-preview-eyes-on-networking-growth-amid-rising-ai-datacenter-demand-200665218