Cisco Systems’ (CSCO) continued to push higher against a down market Friday after its better-than-expected fiscal third-quarter earnings report and bullishness on the company’s artificial intelligence (AI) prospects prompted HSBC Global Investment Research to upgrade CSCO stock Thursday night.
The move extended a double-digit run since Wednesday evening’s Q3 announcement, and came alongside a raft of positive notes from other Wall Street research firms.
Cisco on Wednesday night announced adjusted earnings per share (EPS) of $1.06 against expectations for $1.04, while revenues that grew 12% to $15.84 billion eclipsed estimates for $15.56 billion. On an unadjusted basis, net income of $3.37 billion (85¢ per share) was a 35% jump from the year-ago quarter’s $2.49 billion (62¢ per share).
The company also provided an upside surprise on fourth-quarter guidance, calling for $1.16-$1.18 in adjusted EPS (vs. estimates for $1.07) and $16.7 billion-$16.9 billion in revenues ($15.8 billion). At the same time, however, CSCO said it would cut 4,000 employees—the latest in what has been a surge of mass layoffs by U.S. corporations.
Related: HSBC, Yardeni Add to Growing Stack of S&P 500 Upgrades
HSBC Upgrades CSCO Stock to Buy
Stephen Bersey, Head of US Technology Research at HSBC Global Investment Research, upgraded Cisco’s shares to Buy from Hold on Thursday evening, saying that artificial intelligence infrastructure momentum is resetting Cisco’s growth profile.
| Cisco Systems (CSCO): Quick Stats | |
|---|---|
| Market cap | $462.1 billion |
| Dividend yield | 1.8% |
| Forward price-to-earnings (P/E) | 20.9 |
| Price/earnings-to-growth (PEG) | 1.5 |
| Data is as of May 15, 2026. | |
“We see three growth drivers that strengthen the investment case: (1) Hyperscaler AI build-outs, (2) enterprise AI networking upgrades, and (3) campus modernisation as traffic, security, and latency requirements rise,” Bersey says. “Despite gross margin pressure, management has credible offsets through pricing, tighter contract terms, supply chain commitments, OpEx discipline, and lower memory utilisation within designs.”
HSBC also drastically ramped up its price target, to $137 per share from $77 previously, implying another 19% upside from Thursday’s closing price, which itself reflected a 13% post-earnings pop. The price target is based on a target price-to-earnings (P/E) ratio of 29, which is a significant upgrade from its previous 17.5; HSBC credits “Cisco’s shift from a low-growth networking profile to a structural AI infrastructure thesis.”
The technology-sector dividend stock also offers a better-than-average 1.8% in yield.
Wall Street Continues to Love CSCO After Earnings
The analyst community has warmed up to Cisco Systems throughout 2026 amid what has been a more than 50% year-to-date gain.
Related: The 10 Best Fidelity ETFs You Can Buy [Invest Tactically]
Currently, 18 equity researchers call CSCO stock a Buy, versus seven Holds and one Sell, according to S&P Global Market Intelligence data. Those analysts have an average 12-month price target of $119.54, implying only about 3% to 4% upside from here. They also peg long-term (next three to five years) earnings growth at about 8%.
BNP Paribas Equity Research senior analyst Karl Ackerman (Outperform, equivalent of Buy) raised his price target to $132, from $87 previously, on Thursday, citing “catalysts from broadening applications of Silicon One [networking chips] and Acacia optics in AI and datacenter networking, an accelerating campus refresh cycle, an expanding partnership with Nvidia (NVDA), and Splunk synergies.”
Morgan Stanley Research’s Meta Marshall and Antonio Jaramillo reiterated their Overweight (equivalent of Buy) rating, writing that “CSCO’s improved hyperscaler relationships are paying dividends, expecting AI revenues to quadruple Y/Y in FY26.” They added that Cisco is hitting a growth rate it hasn’t achieved in more than 15 years.
Keith Snyder, analyst at independent research firm CFRA, raised his price target to $125 from $85 previously and upped his earnings estimates but maintained a Hold rating on CSCO shares.
Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.
What If I Need Help Picking Stocks?
Motley Fool Stock Advisor is a stock picking service that espouses my favorite, plain-vanilla trading style: buy-and-hold. Fool analysts provide recommendations for both “Steady Eddies” and potential high-flying stocks with sound fundamentals—exactly the combination of holdings you want to generate strong performance without risking extremely high volatility.
Importantly, Stock Advisor doesn’t just give you a list of tickers and call it a day—it also provides investment rationales and research for each pick to help educate you before you buy.
Stock Advisor stock picks have performed exceptionally well over the service’s 22-year existence. The service has made 190 stock recommendations that have historically delivered 100%+ returns.
The service charges a discounted rate for the first year and has a 30-day membership-fee-back period. Read more in our Motley Fool Stock Advisor review, or sign up for Stock Advisor today.
- Motley Fool Stock Advisor is a stock service that provides recommendations for both "steady Eddie" and high-flying stocks, as well as a few ETFs for investors who want diversified holdings, too.
- Just getting started? Stock Advisor provides 10 "Foundational Stocks" you can use to anchor your portfolio.
- You're not alone! Stock Advisor membership also gives you access to a community of investors who also want to outperform the market and love talking shop.
- Enjoy access to GamePlan: Motley Fool's financial planning hub, which includes advice on personal finances, taxes, retirement, and more, as well as calculators and other financial tools.
- Limited-Time Offer: Get your first year with Stock Advisor for $99 (vs. $199 usual value)—a 50% discount for new members!—by clicking our link.*
- Discounted introductory price
- Strong outperformance above S&P 500
- High overall average return for stock picks
- High renewal price
- Not every stock is a winner
Related: Best Target-Date Funds: Fidelity vs. Schwab vs. T. Rowe vs. Vanguard
Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
