Morgan Stanley changes up Cisco stock price target after earnings

There's a mentation of Cisco (CSCO) that Wall Street wrote disconnected years agone — a bequest networking elephantine stuck successful the dilatory lane portion flashier AI names grabbed each the attention. That communicative is getting harder to archer lately.

The 41-year-old multinational exertion conglomerate headquartered successful California conscionable reported grounds quarterly gross of $15.8 billion, up 12% twelvemonth implicit year, beating the precocious extremity of its ain guidance. Non-GAAP net per stock (EPS) came successful astatine $1.06, up of expectations.

CEO Chuck Robbins didn't hide the lead.

"Cisco delivered grounds quarterly gross successful Q3, and we saw precise strong, broad-based request for our products," helium said successful the company’s third-quarter net statement, "demonstrating the relevance of our exertion for connecting and securing AI."

Morgan Stanley was already watching. The steadfast had been overweight connected Cisco for a while, betting connected a operation of hyperscaler relationships, an endeavor merchandise cycle, and a networking walk backdrop that was softly strengthening.

The past clip Cisco grew astatine this pace? More than 15 years ago.

Morgan Stanley raised Cisco's banal terms people to $120 from $91

After this 3rd 4th 2026 (Q32026), Morgan Stanley raised its terms people to $120 from $91, successful a enactment shared with maine astatine TheStreet. The azygous astir important fig successful Cisco's 4th wasn't gross oregon EPS. It was the AI orders figure, and it moved dramatically.

Coming into Q3, Cisco had guided for astir $5 cardinal successful AI infrastructure orders for fiscal twelvemonth 2026 (FY26). After the quarter, that people was raised to $9 billion, according to Cisco’s Q32026 statement. Year-to-date AI orders already stood astatine $5.3 cardinal done Q3.

My reappraisal of the information shows however accelerated this has moved:

• FY25 AI orders: $2 billion

• FY26 AI orders guidance (original): $5 billion

• FY26 AI orders guidance (revised): $9 billion

• FY27 AI gross commitment: At slightest 50% YoY growth, targeting astir $6 billion
  Source: Morgan Stanley note

According to the Morgan Stanley note, each 5 large hyperscalers grew triple digits successful AI-related orders. That means the spot is broad, not concentrated successful 1 oregon 2 relationships. The steadfast added 5 caller plan wins successful Q3 unsocial — 2 successful optics and 3 successful systems — according to the note.

Morgan Stanley flagged 1 happening worthy watching: AI orders totaled $1.9 cardinal successful Q3, down from $2.1 cardinal successful Q2 and $1.8 cardinal successful Q1. The quarterly fig tin beryllium lumpy. The institution says Q4 needs to beryllium a "meaningful pickup" to deed the $9 cardinal full-year target, and absorption expressed assurance that the pipeline supports it, the enactment indicated.