We recently published a list of 12 Best FAANG+ Stocks to Invest in Right Now. In this article, we are going to take a look at where Cisco Systems, Inc. (NASDAQ:CSCO) stands against other best FAANG+ stocks to invest in right now.

The group of stocks formerly known as FAANG were synonymous with technological prowess, market dominance, and high growth. These companies provided exponential returns and offered the chance to be part of the technological revolution. Their rise to dominance was fueled by innovation, digital transformation, the increasing use of the internet, and their insatiable hunger for growth. In the process, they reshaped industries, altered consumer behavior, and redefined customer engagement. However, over the past couple of years, the acronym has lost some of its relevance as some names have changed and new companies have encroached on the territories of these mega-caps. As a result, the market has started using the term “Magnificent Seven” to better represent the most valuable tech stocks. In this list, we include the ‘Magnificent Seven’ plus five interesting stocks that focus on the transformational technology growth trends such as artificial intelligence, cloud computing, EV technology, and streaming.

Let’s begin by understanding the sheer magnitude of these stocks. We created an equal-weighted portfolio (equal investment in each stock) of all 12 mega-cap technology stocks in this list and compared their combined performance with the S&P 500 Index over the past 5 years. Astonishingly, the mega-caps portfolio has returned over 385% compared to the S&P 500 Index’s return of around 86%. Additionally, these 12 stocks now have a combined market cap of over $20.0 trillion, with around $14 trillion added in the past 5 years. In comparison, the total market cap of all US-listed stocks is approximately $60.5 trillion (as of December 2024; source: Wilshire 5000 Index), making these mega-caps account for nearly one-third of the total US market value. Although it’s not entirely fair to compare market caps to GDP, if we could, and if these 12 mega-caps formed a country, they would rival China as the second or third largest country by nominal GDP.

Despite recent intense competition, challenging market dynamics, and a difficult regulatory environment, these tech leaders still stand tall with their legacy of innovation and digital transformation. We believe their substantial investments in technology infrastructure, strategic acquisitions, international expansion, and continuous innovation have helped them maintain their dominance. Additionally, the rise of artificial intelligence and machine learning has opened new avenues for growth among these tech giants.  With that, let’s explore these 12 stocks.

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Out Methodology

To identify the 10 best FAANG+ stocks, we compiled a list of U.S.-listed technology companies with largest market capitalization, along with the stocks from the FAANG acronym. Ultimately, the stocks were ranked in ascending order based on their market capitalization, with the stock having the highest market capitalization ranked at the top.

Note: All pricing data is as of market close on January 31.

At Insider Monkey we are obsessed with 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 funds: 60

Cisco Systems, Inc. (NASDAQ:CSCO) provides products and technologies in networking, cybersecurity, collaboration, and observability. The company designs and sells a broad range of technologies that support the internet and enable digital transformation for businesses, public institutions, governments, and service providers, including hyperscalers. Cisco’s AI-powered offerings include networking hardware, software, and services, with a strong focus on network modernization solutions, data center solutions, cloud computing, and security. The company’s market cap currently stands at $243 billion, up from $190 billion five years ago.

Two-thirds of Cisco Systems, Inc. (NASDAQ:CSCO)’s revenue comes from networking, where it primarily sells switching, routing, wireless, server products, and software. The company is well-positioned to benefit from the ongoing digital transformation across industries. It has been heavily investing in its software and subscription-based services, which now account for a significant portion of its revenue (around 57% as of the October 2024 quarter). Its focus on enhancing security offerings and expanding cloud capabilities is expected to drive growth.

On January 28, 2025, an analyst from Exane BNP Paribas upgraded the stock to Outperform from Neutral and raised the price target from $57 to $72. The analyst anticipates several catalysts that could drive Cisco’s revenue and earnings growth beyond expectations. He believes that ethernet will gain better traction in backend artificial intelligence networks in 2025. Additionally, Meta Platforms Inc. is expected to deploy Cisco Systems, Inc. (NASDAQ:CSCO)’s next-generation 8501 switch, which should see increasing volumes in Q1 2025.

Overall, CSCO ranks 12th on our list of best FAANG+ stocks to invest in right now. While we acknowledge the potential of CSCO to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CSCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

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