https://finance.yahoo.com/news/2-old-school-tech-giants-222000508.html
Cisco remains the dominant leader in the enterprise switching and routing market, but large cloud companies have increasingly been choosing alternatives for their networking needs. In late 2022, original design manufacturers had captured about half of the hyperscale data center switch market, Arista Networks was in second place with a 30% share, and Cisco was in a distant third place with just a 10% share of the market.
This situation is particularly problematic for Cisco because it's the hyperscalers that are buying up AI accelerators and building out massive AI data centers. The company has made some changes over the past few years, embracing disaggregation and breaking the tight coupling between its hardware and its software. Hyperscalers have unique networking requirements that often aren't met by fully integrated solutions.
Cisco is starting to see some upside from its shifted strategy. In the company's latest quarter, product order growth from hyperscalers was in the double digits. This helped drive cumulative AI orders beyond $1 billion in the latest quarter. Three of the top four hyperscalers are deploying the company's Ethernet AI fabric, and the company expects an additional $1 billion of AI product orders in fiscal 2025.
Those AI orders will contribute to the company's expected $55 billion to $56.2 billion of revenue in fiscal 2025, along with adjusted earnings per share between $3.52 and $3.58. With Cisco stock trading for about 14 times forward earnings, investors shouldn't ignore this old-school tech giant.