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Can Cisco Systems Inc (NASDAQ:CSCO) Become The Next Big AI Stock?

We recently published a list of top 10 AI stocks Wall Street analysts are upgrading. Cisco ranks 9th in the list. That’s why the stock deserves a deeper look.

There has been much uproar about AI stock valuations and how investors are overpaying for mega-cap tech stocks that are promising something that still lies far into the future — productivity gains, real-life AI products and AGI. But the market doesn’t seem to care what the AI skeptics and naysayers believe. There seems to be no end in sight to the AI-led gains in stocks. And analysts are expecting more. Goldman Sachs’s Scott Rubner recently said that he sees a “wall of money” heading towards the market. Rubner pointed towards the whopping $7.3 trillion sitting in money market funds and said he believes the floodgates are about to open and investors would funnel that money into stocks. According to Rubner’s model, the third quarter of 2024 is when we should expect billions ($29 billion, to be precise) to be flushed into the market.

One doesn’t need to have a crystal ball to know where all of those billions would be headed. AI is the promising theme everyone is betting on and that everyone includes experts, billionaires, money managers and long-term value investors. Tom Lee, Fundstrat Global Advisors co-founder, recently said in a program on CNBC that investors have been “hesitant” for much of the year, but they should just “stick” with “what’s working.” AI, weight loss drugs and related themes is what’s working these days, according to Lee.

Methodology

For this article we picked the top AI stocks Wall Street analysts recently upgraded or gave bullish comments about. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Cisco Systems Inc (NASDAQ:CSCO)

Number of Hedge Fund Investors: 58

Cisco Systems Inc (NASDAQ:CSCO) is in the news after the company launched a $1 billion investment fund that would invest in AI startups. Cisco Systems Inc (NASDAQ:CSCO) has also announced a new partnership with Nvidia to simplify the development of generative AI applications. Wall Street considers Cisco Systems Inc (NASDAQ:CSCO) a promising AI stock, thanks to Cisco Systems Inc’s (NASDAQ:CSCO)  $28 billion acquisition of Splunk. Cisco Systems Inc (NASDAQ:CSCO) expects the AI switching market to exceed $10 billion in the next three years. Cisco Systems Inc (NASDAQ:CSCO) has several AI-focused products, including AI-native cybersec solution Hypershield, AI assistants and other AI infrastructure solutions.

In May, Cisco Systems Inc (NASDAQ:CSCO) reported strong fiscal Q3 results, beating EPS estimates by 7.3% and revenue by 5.50%. Cisco Systems Inc (NASDAQ:CSCO) also increased its full-year revenue guidance. Bank of America analysts led by Tal Liani said in a note that if we exclude the Splunk effect and go with ~3% FY25 revenue growth guidance, Cisco Systems Inc’s (NASDAQ:CSCO) management expects Cisco Systems Inc’s (NASDAQ:CSCO) revenue (excluding Splunk’s) to grow 5% next year, a solid improvement. Bank of America has a Buy rating and $60 price target on the stock.

Morgan Stanley analyst Meta Marshall last month praised Cisco Systems Inc’s (NASDAQ:CSCO) Q3 results, saying Cisco Systems Inc (NASDAQ:CSCO) was able to beat estimates “slightly” with better-than-expected orders. The analyst has an Overweight rating and $58 price target on Cisco Systems Inc (NASDAQ:CSCO). Marshall thinks Cisco’s 2025 earnings estimates are “achievable.”

Overall, Cisco Systems Inc (NASDAQ:CSCO) ranks 9th in Insider Monkey’s list of Analysts are Upgrading These 10 AI Stocks. You can visit Analysts are Upgrading These 10 AI Stocks to see the other AI stocks that are on analysts’ radar. While we acknowledge the potential of Cisco, our conviction lies in the belief that smaller, under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Cisco but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

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