Cisco (CSCO): The AI Boom’s Quiet Winner?

When you hear “Cisco” (NASDAQ: CSCO) you probably think of the last tech bull market: the one that ended with the Dot-com Bubble in 2001. Cisco was one of the top stocks in that bull run.

Nowadays, tech and growth investors are focused on stocks like Nvidia (NASDAQ: NVDA), which sell the “brains” (chips) behind AI. However, our models currently flag NVDA and semiconductors as a whole as C rated … meaning their good holds, but perhaps not the best buys here. 

Cisco, meanwhile is in an A rated industry (communications equipment), plus it’s an A rated stock according to our Zen Ratings system:

And CSCO has an important role to play in the new tech bull market:

As AI scales, every new data center, every inference run, and every LLM deployment is putting massive pressure on networking infrastructure. GPUs get the spotlight, but what connects them (and what makes them usable at scale) is just as essential.

And that’s where Cisco steps in.

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Cisco Is an A-Rated Stock in an A-Rated Industry

Again, you probably know Cisco as the legacy networking giant from the 90s. But what it is today is a low-volatility, high-cash-flow AI infrastructure stock trading at just ~17x forward earnings.

Those cash flows are part of what earn CSCO a B rating for its Financials Component Grade, which weighs things like: 

• Free cash flow to return on assets (ROA): Profitability and efficiency in asset utilization.
• Gross profit to assets: How efficiently a company is generating profit relative to its asset base.
• Long-term debt to assets: Leverage and the company's debt burden relative to its assets.

Cisco also scores a B in 3 other component grades that you can see here.

AI Is a Bandwidth Monster

Every time ChatGPT or Claude answers a question, data has to fly between chips and servers at blistering speeds. AI workloads don’t just need computing … They also need fast, low-latency, ultra-reliable networking.

That’s Cisco’s bread and butter:

• Routers
• Switches
• Optical gear
• 400G/800G systems built for AI clusters
• Silicon One chips already in use by top hyperscalers

AI doesn’t work without this. And Cisco is already selling it. 

Yet while most AI names are riding multiple expansion, Cisco is still trading like it's stuck in a pre-AI world. 

That creates a serious mismatch between what it does and what it’s worth.

Data Center Buildout = Cisco Tailwind

The AI boom is driving a new wave of global data center construction. 

Cisco doesn’t need to sell the servers; it just needs to wire them up and secure them. That’s a longer, steadier tailwind than chip cycles.

Every time a new facility gets built or upgraded for AI, Cisco wins a piece of it.

The Bottom Line

No, Cisco isn’t the next hot foundation model startup. But it’s a mission-critical vendor to all of them.

For investors chasing AI exposure without the volatility or nosebleed multiples, Cisco offers a very different profile … almost like owning the infrastructure REITs of AI.

It sells the hardware, software, and security that lets AI run at scale, securely, and across enterprise networks. And it does it while paying a dividend and trading at a third of the valuation of many AI names.

Click here to see CSCO fundamentals. 

Click here to see other A-rated stocks in the A-rated Comms Equipment Sector

What to Do Next?

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