Growth in the traditional networking equipment industry may have peaked! Piper Sandler lowers its price target on Cisco Systems, Inc. (CSCO.US) to $125.

Investment bank Piper Sandler analyst James Fish maintained a "Neutral" rating on Cisco Systems, Inc. (CSCO.US) while lowering the price target from $132 to $125. The analyst said they lowered their price-to-earnings multiple expectations given market concerns that growth in the networking equipment industry may be nearing its peak. Cisco Systems, Inc.'s stock price hit an all-time high in June and has risen 57% over the past 12 months, during which the company's revenue soared alongside the artificial intelligence (AI) boom. Earnings released last month showed that Cisco Systems, Inc.'s fourth-quarter revenue for the period ended July 25, 2026, rose 18% year-over-year to $17.3 billion a single-quarter record with adjusted earnings per share (EPS) of $1.22, both exceeding analyst expectations. AI became the biggest highlight of the fourth-quarter results. Cisco Systems, Inc.'s fourth-quarter AI infrastructure orders from hyperscalers reached $4 billion, accounting for 43% of the $9.3 billion in such orders for the full 2026 fiscal year. At the same time, product orders rose 35% year-over-year and still grew 25% excluding hyperscalers, indicating that demand is not entirely dependent on large AI customers. Cisco Systems, Inc.'s role in AI data center construction is growing in importance. In the past, Cisco Systems, Inc. was long regarded as a traditional networking equipment giant, with its core business concentrated in enterprise networking, campus networking, switches, routers, and other areas. As AI training and inference clusters increase demand for high-speed networking, low-latency connections, and data center interconnection, the importance of networking equipment has risen markedly, and Cisco Systems, Inc. is trying to capture a larger share of this round of AI infrastructure capital spending. Cisco Systems, Inc. has announced a restructuring this year to direct more resources toward the AI market and plans to cut less than 5% of its workforce. The company previously said the restructuring could result in up to $1 billion in severance and other one-time costs. In other words, AI is not a single-quarter theme but the direction of Cisco Systems, Inc.'s resource reallocation. Cisco Systems, Inc.'s guidance for fiscal 2027 is significantly above analyst expectations. The company expects fiscal 2027 revenue of $72.2 billion to $73.4 billion, with the midpoint about 6% above market expectations; it expects adjusted EPS of $5.05 to $5.11, with the midpoint nearly 6% above market expectations. However, Cisco Systems, Inc. gave its first full-year AI revenue forecast about $7.5 billion for fiscal 2027, accounting for only about 10% of total expected revenue for the year, while the company's cumulative AI-related orders over the past year have reached $9.3 billion. This gap has raised market doubts about the efficiency of order conversion.