Cisco Systems (CSCO) is back in focus after investors zeroed in on its push into AI infrastructure and cloud, highlighted by AI related orders, the Splunk integration, and fresh cybersecurity investments.

The share price has recently eased, with a 30 day share price return of a 2.99% decline. However, a 90 day share price return of 8.56% and a 1 year total shareholder return of 30.29% suggest momentum has been rebuilding as AI infrastructure deals, cybersecurity investments and the Splunk integration attract renewed attention despite legal and M&A headlines.

If Cisco's AI and cybersecurity push has caught your eye, it may be worth scanning other tech names riding similar themes through high growth tech and AI stocks to see what else stands out.

So with Cisco trading at US$75.47, showing a value score of 4 and a P/E below the industry average, is the market still underestimating its AI and cybersecurity shift or already paying up for future growth?

Most Popular Narrative: 11.7% Undervalued

With Cisco Systems shares at US$75.47 against a narrative fair value of US$85.43, the valuation hinges on how firmly investors back its AI and networking cash flow story under an 8.32% discount rate.

The rapid acceleration in AI infrastructure investment highlighted by record AI infrastructure orders from webscale/cloud customers (doubling targets to $2B in FY25) and continued strength in order pipeline positions Cisco to benefit from surging demand for high performance, AI optimized networking hardware, which is expected to drive both revenue and margin expansion as next generation networks scale globally.

Curious what is baked into that valuation gap? The narrative leans on steady revenue build, firmer margins, and a future earnings multiple usually reserved for premium platforms. Want to see which cash flow and earnings assumptions have to line up for that fair value to hold?

Result: Fair Value of $85.43 (UNDERVALUED)

However, this hinges on security and services improving and AI orders holding up, as setbacks in either could quickly challenge that 11.7% undervalued story.

Build Your Own Cisco Systems Narrative

If this narrative does not quite match your view, or you prefer to test the numbers yourself, you can build a customised version in minutes: Do it your way.

A great starting point for your Cisco Systems research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Cisco is only one piece of your portfolio puzzle, it makes sense to widen the lens and see which other opportunities match your style and risk comfort.

• Spot potential growth stories early by scanning these 3534 penny stocks with strong financials that pair smaller market caps with stronger financial footing than many peers.
• Target the AI theme more broadly by checking out these 25 AI penny stocks focused on companies tied to artificial intelligence trends beyond networking alone.
• Hunt for value oriented opportunities using these 885 undervalued stocks based on cash flows that filters for stocks priced below their cash flow based assessments.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.