Cisco Systems: A Technical and Fundamental Bull Case in the AI Infrastructure Surge

Marcus LeeTuesday, Jun 17, 2025 5:40 pm ET
60min read

As the race to dominate AI infrastructure intensifies,

Cisco Systems
(NASDAQ:CSCO) has emerged as a strategic play, backed by both analyst upgrades and technical signals pointing to upside. With Deutsche Bank recently upgrading the stock to Buy and highlighting its AI-driven growth trajectory, the timing for investors to consider CSCO may be optimal. Here's why the technicals align with the fundamentals—and why the stock could be primed for a breakout.

The Deutsche Bank Upgrade: A Catalyst for AI-Driven Growth

Deutsche Bank's Buy rating upgrade on June 2025, coupled with a price target raised to $73, underscores Cisco's position as a leader in AI infrastructure. The bank highlighted mid-single-digit revenue growth expectations, driven by AI, enterprise deployments, and sovereign spending. Cisco's transition to a subscription-based software and services model—now accounting for 56% of revenue—is stabilizing margins and enabling reinvestment in growth.

The Q1 2025 earnings, with $14.15 billion in revenue (up 11% YoY) and strong performance in its Security segment (a 54% surge to $2.01 billion), further validate this thesis. Analysts now see a 7-8% EPS CAGR, fueled by AI tailwinds and a refreshed Campus portfolio. For investors, this is a durable growth story with technical validation.

Technical Analysis: Why Now Could Be the Time to Buy

Cisco's stock is currently trading near $65.51, with key technical levels setting the stage for a potential breakout or consolidation.

Resistance Levels to Watch:1. $66.50: The all-time high from September 2000. Breaking this level would signal a bullish trend, with the next target at $82.00. However, a failure could form a double-top pattern, risking a drop to $52.00.2. $65.60: A critical June resistance where an Evening Star candlestick pattern emerged, hinting at a potential downturn. Sustained breaches above this could reignite momentum.3. $63.98: Immediate resistance in the $62.39–$63.98 band. Holding here supports upward momentum.

Support Levels:1. $62.20: Near-term support. A breakdown risks a slide to $42.85, a multiyear low.2. $62.39–$63.98: A critical zone. Holding this band keeps bulls in control; a breach could signal weakness.

Moving Averages and Indicators:- The 50-day EMA ($62.10) and 200-day EMA ($57.10) both sit below the current price, signaling a Buy.- The MACD (1.15) is positive, and RSI (62) is neutral but approaching overbought territory. Investors should monitor these for confirmation of a sustained breakout.

Competing in the AI Infrastructure Race: Cisco vs. CoreWeave

While Cisco leverages its established networking and security ecosystem, newer players like CoreWeave (NASDAQ:CRWV) are challenging with hyperscale AI cloud solutions. Here's how they stack up:

Cisco's Advantages:- Diversified Portfolio: Revenue streams from networking, security, and data centers provide stability.- Strategic Partnerships: Collaborations with Microsoft, NVIDIA, and the AI Infrastructure Partnership (AIP) position it as a full-stack AI solutions provider.- Supply Chain Resilience: A global footprint and strong supply chain mitigate trade risks.

CoreWeave's Play: - Hyperscaler Growth: A 420% revenue jump to $981.6 million in Q1 2025, fueled by AI contracts (e.g., a $4.1 billion deal with OpenAI). - Niche Focus: Specializes in GenAI infrastructure, but faces execution risks and $149.6 million net losses.

The technical contrast is stark: While CoreWeave's stock has surged 120.8% YTD, its valuation may be “priced in,” as noted by BofA's downgrade. Cisco, by contrast, offers a lower-risk entry point with strong fundamentals and a tested business model.

Investment Thesis: Buy the Dip, Target $73+

Cisco's technical setup and strong sector leadership make it a compelling Stock of the Day buy candidate. Key actions for investors:

  1. Buy on Support: Use the $62.20–$63.98 band as a buying opportunity. A breakout above $66.50 could unlock gains toward $73 (Deutsche Bank's target) or even $82 (a multiyear high).
  2. Monitor Resistance: If Cisco fails to hold $65.60, consider scaling back exposure.
  3. Watch Q4 Earnings (Aug 13, 2025): A beat could solidify its AI narrative. However, historical backtests from 2020 to 2025 show that buying on positive earnings announcements and holding for 30 days underperformed, delivering a CAGR of 6.54% with excess returns of -68.31%, highlighting the need for technical validation alongside earnings catalysts.

Risk Management: Set a stop-loss below $62, with a long-term target eyeing the $82 resistance.

Conclusion: Cisco's AI Play Offers Balance in a Volatile Market

In a sector crowded with high-flyers like CoreWeave, Cisco's proven infrastructure, diversified revenue, and technical setup offer a balanced risk-reward profile. With AI demand surging and institutional ownership at 73.33%, the stock is primed to benefit from both near-term catalysts and long-term trends. For investors seeking a leader in AI infrastructure, now is the time to act—before the next leg up.

Final Call: Buy CSCO near $65.51, with a target of $73 and a stop below $62. This is a stock to own as AI reshapes the tech landscape.