The growth of the traditional network equipment industry may have peaked! Piper Sandler lowers Cisco (CSCO.US) target price to 125 USD.

According to reports from Zhitong Finance APP, investment bank Piper Sandler analyst James Fish has maintained a “Neutral” rating on Cisco (CSCO.US), while lowering the target price from $132 to $125. The analyst stated that, considering market concerns that growth in the network equipment industry may be nearing its peak, they have revised down their expectations for the price-to-earnings ratio multiple.

Cisco's share price hit an all-time high in June, rising 57% over the past 12 months, with the company’s revenue surging amid the artificial intelligence (AI) boom. Last month’s financial report showed that Cisco’s revenue for the fourth fiscal quarter ending July 25, 2026, increased 18% year-on-year to $17.3 billion—a record for a single quarter—and adjusted earnings per share (EPS) reached $1.22, both exceeding analyst expectations.

AI was the major highlight of the fourth quarter’s results. Cisco’s AI infrastructure orders from hyperscalers in the fourth quarter reached $4 billion, accounting for 43% of the $9.3 billion in such orders for fiscal year 2026. At the same time, product orders increased 35% year-on-year, and even excluding hyperscalers, still grew by 25%, showing that demand is not entirely driven by large AI clients.

Cisco’s importance in AI data center construction is rising. Previously, Cisco had long been regarded as a traditional network equipment giant, with core business focused on enterprise networks, campus networks, switches, routers, and related fields. As AI training and inference clusters demand higher-speed networks, low-latency connectivity, and inter-data center connectivity, the importance of network equipment has clearly increased, and Cisco is seeking to capture a larger share in this round of AI infrastructure capital expenditure.

This year, Cisco has announced a restructuring, allocating more resources to the AI market and planning to cut less than 5% of its workforce. The company previously stated that the restructuring could result in up to $1 billion in severance and other one-time costs. In other words, AI is not just a single-quarter theme, but the direction for Cisco’s resource reallocation.

Cisco’s guidance for fiscal year 2027 is significantly above analyst expectations. The company expects revenue for fiscal 2027 to reach $72.2 billion to $73.4 billion, with the midpoint about 6% higher than market expectations; adjusted EPS is expected to be $5.05 to $5.11, with the midpoint nearly 6% higher than market expectations.

However, Cisco provided its first annual AI revenue forecast—approximately $7.5 billion for fiscal year 2027, which accounts for about 10% of the expected total annual revenue. Over the past year, the company’s total AI-related orders have reached $9.3 billion. This gap has raised concerns in the market regarding the efficiency of order conversion.