Cisco Systems Inc. stands out due to its strong execution in high-growth areas such as artificial intelligence and digital security. In the most recent quarter, this technology giant reported a 9.4% year-over-year revenue increase to $14 billion.
This reversed a streak of revenue declines and surpassed analyst expectations. AI infrastructure orders exceeded $350 million and the integration of a major observability platform has already proven accretive to earnings while boosting security and monitoring offerings and expanding the firm’s recurring revenue base.
Aside from a 2.5% dividend increase, a new $15 billion share repurchase authorization adds further support to the share price. Meanwhile, the stock trades at 16.6 times the company’s forward earnings forecast.
CISCO SYSTEMS INC. (Nasdaq symbol CSCO) is a top pick for 2025.
Through their shares, investors tap a global producer of hardware and software that links and manages computer networks.
With the April 2025 payment, Cisco raised your quarterly dividend by 2.5%. Investors receive $0.41 a share instead of $0.40. The new annual rate of $1.64 yields a solid 2.8%.
Including this latest increase, the company has raised its dividend by an average of 2.6% annually over the last 5 years. Its TSI Dividend Sustainability Rating is Above Average.
The company also added $15 billion to its share repurchase authorization. It can now buy back up to $17 billion of its shares. There are no time limits for those repurchases.
In March 2024, Cisco completed its acquisition of Splunk Inc. (Nasdaq symbol SPLK) for $28 billion. That firm makes software that lets organizations analyze their data in real time. The purchase will enhance Cisco’s current cybersecurity software business. Their combined expertise in AI will also help clients better anticipate and prevent cyberattacks.
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That purchase helped lift the company’s revenue in its fiscal 2025 second quarter, ended January 25, 2025, by 9.4%, to $13.99 billion from $12.79 billion a year earlier. That beat the consensus forecast of $13.87 billion.
Sales of new equipment (73% of total revenue) rose 10.9%, while revenue from software and services (27%) improved 5.6%.
Overall earnings in the quarter, excluding unusual items, rose 6.3%, to $3.76 billion from $3.54 billion; due to fewer shares outstanding, per-share earnings gained 8.0%, to $0.94 from $0.87. That also topped the $0.91 consensus estimate.
Cisco: AI infrastructure orders surge as tech demand accelerates
Cisco continues to shift its operations towards a subscription model instead of one-time sales. That gives its more-predictable revenue streams. In the latest quarter, annualized recurring revenue grew 22% to $30.1 billion.
The company also continues to see strong demand for products related to artificial intelligence (AI). Orders related to AI totalled $350 million in the latest quarter and should reach over $1.0 billion for all of fiscal 2025.
Cisco uses third-party manufacturers in many countries to make its products, so it can shift its production to help avoid new tariffs. The company’s increasing focus on cybersecurity software also limits its tariff risk.
Still, despite concerns that U.S. tariffs could increase Cisco’s costs, the company will probably earn $3.57 a share, and the stock trades at just 16.6 times that estimate. That’s an attractive multiple, as the company spends a high 16% of its revenue on research.
Recommendation in Dividend Advisor: Cisco Systems Inc. is a buy.
