How can you position the US stock network hardware sector? JPMorgan recommends Cisco (CSCO.US) and Keysight (KEYS.US).

J.P. Morgan recently released a research report on the US hardware and networking industry, analyzing some non-cyclical companies and expressing optimism about Cisco (CSCO.US) and Keysight Technologies (KEYS.US).

Specifically, J.P. Morgan gave Ciena (CIEN.US) a "neutral" rating. Ciena has a high share in the long-distance optical connection market and is committed to expanding its share in short-distance applications. However, J.P. Morgan believes that its data center business will not see significant progress in the short term, and recent growth will depend more on plug-and-play products.

J.P. Morgan is more bullish on Cisco, giving it a "buy" rating. Cisco's revenue growth target in fiscal 2025 does not depend on the normalization of its federal business. Large enterprise customers are driving the development of Cisco's enterprise business because they have the financial resources to upgrade major infrastructure. In contrast, small and medium-sized enterprise customers face more uncertainty, which limits their ability to invest in large projects and adapt to market changes. In addition, Cisco encourages its customers to take proactive measures to address potential tariffs, actively planning demand and increasing inventory. Cisco noted that overall spending on its product categories remains uneven, with customers prioritizing spending in key areas such as data centers and remote work connections, rather than less important areas such as SD-WAN. Cisco's pricing has always been competitive in the industry, and the current dynamics are still within control.

J.P. Morgan did not rate Hewlett Packard Enterprise (HPE.US). Early adopters of BlackRock products may be cloud service providers and model builders, with lower profit margins than enterprise customers. Hewlett Packard Enterprise acknowledges that it has started slowly in AI server business, but the company has recently started to see results in computing and liquid cooling, and traditional server demand has also been strong.

Finally, J.P. Morgan gave Keysight a "buy" rating. Although its automotive and general electronics businesses have performed poorly, there are signs of recovery in its semiconductor business. With the strong performance of its wired business, J.P. Morgan expects Keysight's commercial communications business to see revenue growth, which may exceed its wireless business in the future. The order trend of its core business will mean that the total orders in the first quarter will be flat sequentially. In addition, the export restrictions in the US have historically had a negative impact of 100-200 basis points on the company's revenue growth.