Cisco Systems, Inc.

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Bullish +65

Zacks Industry Outlook Highlights Cisco Systems, Extreme ... - NewsBreak

AI-generated analysis

πŸ“ˆ Cisco Systems expects at least $6 billion in AI-related revenues for fiscal 2027, driven by hyperscaler demand.

πŸ’° Cisco raised expected hyperscaler AI orders to $9 billion for fiscal 2026, with Q3 orders hitting $1.9 billion.

πŸš€ Extreme Networks reported 11% year-over-year revenue growth in Q3 FY2026 and launched new AI agent 'Extreme Agent ONE'.

πŸ“± Digi International projects ARR to reach $190 million by end of fiscal 2026, representing a 25% increase.

πŸ”’ All three companies are capitalizing on the multi-billion-dollar opportunity in AI infrastructure and high-speed interconnects.

⚠️ The industry faces near-term risks from tariff troubles, inflation affecting SMB spending, and volatile supply chain dynamics.

πŸ“‰ Cisco shares have gained 68.6% in the past year and carry a Zacks Rank #2 (Buy).

πŸ“ˆ Extreme Networks shares are up 67.2% in the past year with a Zacks Rank #3 (Hold).

πŸš€ Digi International shares have gained 101.3% in the past year, though it carries a Zacks Rank #3.

πŸ”‹ Extreme Networks has secured its supply chain through fiscal 2027 to improve margin visibility.

Bullish Signals
  • Cisco Systems expects at least $6 billion in AI-related revenues for fiscal 2027, with hyperscaler AI orders raised to $9 billion for the current fiscal year.
  • Extreme Networks achieved 11% year-over-year revenue growth in Q3 FY2026 and saw product revenues rise 12%, driven by strong enterprise demand.
  • Digi International expects ARR to grow 25% in fiscal 2026, reaching approximately $190 million, supported by AI integration and acquisitions.
  • Cisco returned $2.9 billion to shareholders via repurchases and dividends in the last reported quarter, demonstrating strong capital allocation.
  • Extreme Networks launched Extreme Agent ONE, a new AI agent for enterprise networking, enhancing its product portfolio.
  • Digi International unveiled DANI, an AI network operations agent embedded in its Remote Manager platform, improving operational efficiency.
  • The computer networking industry has outperformed the S&P 500 by 67.4% over the past year compared to the sector's 24.3% rally.
  • Extreme Networks secured its supply chain through fiscal 2027, mitigating component pricing pressure and improving fulfillment certainty.
Risk Factors
  • The computer networking industry faces near-term headwinds from cautious IT spending due to heightened global macroeconomic uncertainty.
  • Volatile supply-chain dynamics and tariff troubles between the US and China remain an overhang on global supply chains for all three companies.
  • Fierce competition in the industry is creating an overhang on pricing power, potentially limiting margin expansion opportunities.
  • Extreme Networks continues to face component pricing pressure and supply chain issues despite recent mitigation efforts.
Full Analysis
Zacks Equity Research highlights Cisco Systems (CSCO), Extreme Networks (EXTR), and Digi International (DGII) as key players in the computer networking industry, which faces near-term headwinds from cautious IT spending, macroeconomic uncertainty, and supply chain volatility. Despite these challenges, the long-term outlook remains positive driven by massive infrastructure upgrades for AI workloads, cloud computing, 5G deployment, and the upcoming Wi-Fi 7 upgrade cycle. Cisco Systems is benefiting significantly from hyperscaler demand for AI infrastructure solutions. The company expects at least $6 billion in AI-related revenues for fiscal 2027, with Q3 FY2026 AI infrastructure orders reaching $1.9 billion (year-to-date total of $5.3 billion). Cisco raised its guidance for hyperscaler AI orders to $9 billion and expects AI infrastructure revenues from these clients to reach approximately $4 billion in fiscal 2026. Extreme Networks is pivoting toward a recurring revenue model with its Platform ONE launch, seeing an 11% year-over-year revenue growth in the third quarter of fiscal 2026. The company recently unveiled Extreme Agent ONE, a new AI agent for enterprise networking, and expects SaaS annual recurring revenues to grow as adoption increases. Digi International is integrating AI into its industrial IoT portfolio with the launch of DANI, an AI network operations agent. The company projects ARR growth of 25% in fiscal 2026, reaching around $190 million by year-end, supported by sustained demand for mission-critical IoT solutions and strategic acquisitions.