UBS raised its price objective on Cisco Systems (NASDAQ: CSCO) to $95.00 from $90.00 and kept a Buy rating after the networking equipment company released quarterly results. The brokerage firm pointed to stronger-than-expected demand in forward-looking metrics as a key justification for the higher target.
In its assessment, UBS highlighted that 'AI' and 'Product' orders came in above expectations, which it said gives the market more clarity on revenue trajectories for the second half of FY26 and into FY27. The firm also called attention to Cisco’s expanding silicon offerings as a catalyst for longer-term opportunity.
Specifically, UBS cited Cisco’s portfolio of in-house chips - the G200 and P200 - and the recently introduced G300. According to the note, these parts address a broad set of AI use cases and enable support for larger GPU/XPU clusters. UBS said this development enlarges Cisco’s AI total addressable market and creates revenue potential that extends beyond FY26.
UBS tempered its outlook on gross margins, however, noting that rising memory input costs will weigh on margins over the next several quarters. The firm adjusted its FY26 gross margin forecast to 67.1% from a prior estimate of 68.0%, reflecting those input-cost pressures.
Despite the anticipated margin compression, UBS pointed out that Cisco raised its FY26 EPS guidance midpoint to $4.15 from $4.11, which UBS viewed as evidence of resilience in the company’s operating model while absorbing higher memory costs.
The company’s fiscal second-quarter 2026 results underpinned the analyst commentary. Cisco reported adjusted EPS of $1.04, beating the consensus of $1.02, and revenue of $15.3 billion, topping the forecast of $15.11 billion. Those figures were cited as a sign of solid execution during the quarter.
Market reaction after the earnings release was described as cautious, reflecting investor sensitivity to the broader economic backdrop even in the face of an earnings beat. UBS’s note frames the combination of order strength and a deeper silicon strategy as supportive of upside opportunities, while memory cost dynamics represent a near-term headwind to margins.
Key Points
- UBS raised its Cisco price target to $95 from $90 and maintained a Buy rating.
- 'AI' and 'Product' orders exceeded expectations, improving visibility for H2 FY26 and FY27.
- Cisco’s silicon lineup now includes the G200, P200, and the newly introduced G300, which UBS says broadens AI addressable market potential beyond FY26.
Risks and Uncertainties
- Higher memory input costs are expected to pressure gross margins over the next several quarters, impacting margin recovery in the short term.
- Investor caution amid prevailing macroeconomic conditions may temper stock momentum despite positive quarterly results.