Cisco is a pioneer in computer networking and has stayed a market leader by successfully adapting to change.
For example, in 2015, the company—then focused on equipment—decided to shift to providing network software. The move reduced its dependence on hardware sales, which tend to be cyclical. Another key shift for the company was its decision to sell its software as a recurring subscription rather than as a one-time purchase. That has further stabilized its revenue stream.
Now, the company is in the middle of another transition, as it incorporates artificial intelligence (AI) tools into its products. This particular shift lets its clients process increasingly large amounts of data to prevent costly cyber incidents.
All in all, we feel this stock offers investors a great way to gain exposure to fast-growing technologies like AI but with less risk and while they earn reliable dividend income.
CISCO SYSTEMS INC. (Nasdaq symbol CSCO) lets investors tap a global producer of hardware and software that links and manages computer networks.
In the past few years, Cisco has expanded its software operations. Steady revenue from subscriptions cuts its reliance on hardware sales.
Under that plan, in March 2024, Cisco acquired Splunk Inc. (Nasdaq symbol SPLK) for $28 billion. The firm makes software that lets organizations analyze their data in real time. The purchase enhanced Cisco’s cybersecurity software business.
Their combined expertise in AI is also helping clients better anticipate and prevent cyberattacks.
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For instance, the company recently launched Cisco IQ, a new AI-powered software platform that will make it easier for customers to monitor their network problems. Initially, the new platform will alert IT (information technology) managers and suggest solutions. Eventually, Cisco IQ aims to respond to and repair performance issues without human intervention.
Cisco secures billion-dollar wave of AI orders
In its fiscal 2026 first quarter, ended October 25, 2025, Cisco’s revenue rose 7.5%, to $14.88 billion from $13.84 billion a year earlier. That beat the consensus forecast of $14.77 billion.
Sales of new equipment (74% of total revenue) rose 9.2%, while revenue from software and services (26%) improved 2.1%.
Overall earnings in the quarter, excluding unusual items, rose 9.3%, to $4.01 billion from $3.67 billion; due to fewer shares outstanding, per-share earnings gained 9.9%, to $1.00 from $0.91. That also topped the $0.98 consensus estimate.
The company continues to see strong demand from operators of datacentres for products related to artificial intelligence (AI). Orders related to AI totalled $1.3 billion in the quarter compared to $2.0 billion for all of fiscal 2025. Cisco expects AI orders will reach $3 billion for all of fiscal 2026.
The stock trades at 18.6 times its forecast earnings for 2026 of $4.16 a share. That’s an attractive multiple, as the company spends a high 16% of its revenue on research.
With the April 2025 payment, Cisco raised your quarterly dividend by 2.5%. Investors now receive $0.41 a share instead of $0.40. The new annual rate of $1.64 yields a solid 2.%.
Recommendation in Dividend Advisor: Cisco Systems Inc. is a buy.
