Cisco Systems (CSCO) Stock Forecast & Price Target

Cisco Systems is well positioned by a powerful combination of leading networking, security, collaboration, and observability franchises, with F4Q26 revenue of $17.3B rising 17.6% year over year and orders up 35% across all products, geographies, and customer segments. Its outlook is strengthened by accelerating AI infrastructure demand, including $4B of hyperscale AI orders in F4Q26, a projected $7.5B in AI revenue for FY27, and FY27 guidance for $72.2B-$73.4B in revenue and $5.08 in adjusted EPS, both above expectations. While gross margins may compress 200 to 300 bps in 1H27 from product mix, operating margins near 35% appear durable thanks to operating leverage, pricing actions, and robust free cash flow of $5B.

Cisco Systems is facing a negative outlook because its near-term revenue mix is expected to shift toward higher hardware shipments, which should pressure gross margins in FY27 and especially in 2Q/FY27. Although management still targets 35% operating margins for the full year, gross margins are guided lower by about 300 bps, suggesting that revenue upside may be offset by weaker profitability and potential stock pressure. The company also faces execution risk in its subscription transition, intense competition, tariff and supply-chain uncertainty, and exposure to federal government spending, which accounts for more than 10% of total revenue.