Cisco’s (CSCO) performance in 2025 has been somewhat underwhelming so far, with the stock rising just over 9% year-to-date. However, there are reasons to believe this slow start might not last. Despite the modest gains, Cisco’s underlying business remains strong, and it continues to deliver solid growth.

The ongoing demand for Cisco’s networking products and solutions continues to drive its financials, providing a solid foundation for future expansion. Moreover, Cisco is witnessing solid growth in its annualized recurring revenue (ARR), remaining performance obligations (RPO), and subscription revenues. These metrics are crucial because they reflect predictable, long-term income streams.

Additionally, Cisco is benefiting from substantial orders for AI infrastructure from major corporations. This reflects the company’s ability to capitalize on emerging technological trends.

As Cisco is performing well, the highest analyst price target for CSCO stock stands at $79, suggesting potential upside of roughly 29% from its recent closing price of $61.29 on May 14. This optimistic projection reflects confidence that Cisco’s consistent financial performance and AI-led demand could eventually translate into stronger stock price gains. Let’s take a closer look.

Cisco’s Solid Financials to Lift Stock Higher

Cisco’s latest quarterly earnings offered further reasons for optimism, with revenue and earnings per share outperforming the Street’s forecast. The company reported growth in all major recurring metrics. Its ARR climbed to $30.6 billion, marking a 5% year-over-year increase, while subscription revenue was another bright spot, growing 15% to $7.9 billion and now accounting for 56% of Cisco’s total revenue. Software revenue surged 25% to $5.6 billion, and total RPO stood at $41.7 billion, which is 7% higher than last year.

Product orders tell a similar story of growth. Total product orders increased by 20% year-over-year, or 9% on an organic basis, excluding the Splunk acquisition. Enterprise product orders surged 22%. Public sector orders also rose 8%, with notable strength in U.S. federal orders, which rebounded and returned to double-digit growth after a challenging start to the year.

Cisco’s service provider and cloud customer segments were particularly strong, with product orders jumping 32% year-over-year, thanks to triple-digit growth among top web-scale customers. This growth reflects Cisco’s deepening relationships with cloud giants scaling their AI infrastructure.

From a product perspective, Cisco’s networking portfolio remains in high demand. Web-scale infrastructure, enterprise routing, switching, and industrial IoT products all contributed to double-digit order growth. Campus switching orders increased by high single digits, even against tough comparisons from last year. Meanwhile, the company’s WiFi 7 portfolio experienced triple-digit sequential order growth, and its industrial IoT portfolio saw a 35% year-over-year increase in year-to-date orders.

Cisco’s data center switching business is also gaining traction, with double-digit year-to-date order growth.

Cisco Systems continues to balance steady organic growth with a strategic focus on acquisitions to drive innovation and accelerate its expansion. A notable move in the third quarter was Cisco’s acquisition of SnapAttack, a cybersecurity company that enhances Splunk’s capabilities.

Beyond its growth initiatives, Cisco’s financial health remains robust. The company’s revenues are on track for rapid growth, and profitability is holding strong. In the third quarter, Cisco’s adjusted gross margin improved by 70 basis points, reaching an impressive 67.6%. This margin expansion highlights Cisco’s ability to scale efficiently while maintaining operational strength.

Cisco Stock: Analysts’ Outlook

Wall Street has a “Moderate Buy” consensus rating on CSCO stock. However, the combination of solid financial performance, predictable recurring revenues, and AI-driven growth opportunities could catalyze stronger stock price gains for Cisco.

Final Thoughts

While Cisco stock has been slow out of the gate in 2025, its underlying business dynamics paint a bullish narrative. The company’s robust financials, growing AI infrastructure demand, focus on enhancing shareholder value, and strategic acquisitions position it well to deliver solid growth.