Networking giant Cisco Systems (CSCO) got a substantial boost today thanks to new reports out of Wells Fargo that upgraded the stock on the strength of its chops in artificial intelligence (AI). That news proved welcome for shareholders as well, who sent Cisco shares blasting up nearly 6% in Thursday afternoon’s trading.
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The word from Wells Fargo, via analyst Aaron Rakers, who has a five-star rating on TipRanks. Rakers hiked his rating on Cisco stock from Equal Weight to Overweight. He also hiked his price target on Cisco from its previous $72 to $75, which represents a 22% upside potential.
All excellent news, and built on solid enough reasoning. Rakers pointed out that Cisco is just now out of the fiscal third quarter, and has already managed to pass its order target of $1 billion with a full quarter to go. And, it has been working to branch out into further AI operations, with Rakers declaring, “We also see Cisco as well-positioned for longer-term enterprise AI….” That in turn is likely to further fire up positive investor sentiment and ultimately offer increasing confidence as a “…continued EPS upside + value rerate story.”
About That AI Thing…
Cisco has already been demonstrating its chops in AI, as evidenced by a recent partnership with the HUMAIN initiative in Saudi Arabia. The HUMAIN initiative wants to make Saudi Arabia a major figure in AI operations by building AI infrastructure that is both open and scalable, making it accessible, and able to handle all the users that try to access it.
Cisco also announced it was stepping up its partnership with G42, which would help drive AI operations in the United Arab Emirates as well. That, plus HUMAIN, is two separate fronts in the region that will feature Cisco getting involved, and should go quite some way to securing Cisco a place at the table when it comes to AI development.
Is Cisco a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CSCO stock based on 10 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 26.79% rally in its share price over the past year, the average CSCO price target of $71 per share implies 9.5% upside potential.
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