Citigroup: Cisco (CSCO.US) has opportunities in the AI field, raises target price to US$62

Zhitong Finance learned that Citigroup raised its rating on Cisco (CSCO.US) from neutral to buy and raised its target price to US$62 from US$52, saying it will see opportunities in the field of artificial intelligence.

Analyst Atif Malik wrote in a note to clients: "While AI currently accounts for a small part of the business (about 2% of revenue), we see potential for greater contributions. As more AI arrives, our view of the group becomes gradually more constructive, and we expect investors to continue to shift from semiconductors/hardware to networking equipment, which will benefit the group's valuation."

Malik also raised his earnings expectations for Cisco in fiscal 2025 and 2026 by 2% and 5%, respectively. Analysts generally expect Cisco to earn US$0.87 per share in the next quarter, with total revenue of US$13.77 billion.

Malik believes that the quarterly results to be released on November 13 may be a "potential catalyst", as Cisco joined Meta's (META.US) artificial intelligence hardware portfolio after Mark Zuckerberg-led Meta announced its new artificial intelligence network structure "Disaggregated Scheduled fabric".

Malik wrote: "We still believe Meta remains an important partner and customer of Arista Networks (ANET.US) (accounting for about 21% of 2023 sales)."