Wall Street Sees 16% Upside in Cisco (CSCO) Despite Recent 9.4% Selloff

Cisco Systems (NASDAQ: CSCO) has dropped 9.4% over the past week. That’s seven times worse than the S&P 500’s 1.28% decline over the same period. Yet Wall Street analysts still see the stock climbing to an average target of $88.81, implying roughly 16% upside from current levels. The question: is this a buying opportunity or are analysts missing something the market already knows?

What makes this selloff unusual is that Cisco actually beat earnings expectations. The company reported $1.04 per share on February 10, topping the consensus estimate of $1.02. Revenue came in at $15.35 billion, up 8.5% year-over-year, though it did miss the Street’s $15.42 billion target by a hair. Management raised full-year guidance and highlighted $2.1 billion in AI infrastructure orders from hyperscalers. By traditional metrics, this was a solid quarter.

Record Earnings Met With a Shrug

So why did the stock crater? The answer appears to be a fundamental shift in how investors are valuing networking and software companies in 2026. According to a February 16 analysis, the market is experiencing what some are calling a “SaaSpocalypse”, where traditional SaaS and infrastructure companies are being repriced based on concerns about AI disruption. The thesis: autonomous AI agents could eventually disintermediate human workflows and seat-based licensing models, threatening the long-term revenue sustainability of companies like Cisco.

This isn’t about current profitability. It’s about terminal value. Investors are asking whether Cisco’s networking business model survives a world where AI fundamentally changes how enterprises buy and deploy technology. That existential question is powerful enough to override strong quarterly results.

There’s also a near-term margin story. Multiple reports flagged concerns about memory cost pressures tied to global supply shortages. Competitor Arista Networks rallied 4.8% on February 15 after demonstrating confidence in managing those same costs, suggesting investors see Arista as better positioned. Operating cash flow at Cisco fell 19% year-over-year to $1.82 billion, which doesn’t help the narrative.

Perhaps most telling: seven senior executives, including CEO Charles Robbins, sold a combined $3.05 million worth of stock on February 10 at $86.78 per share, just days before the decline accelerated. That’s the same day earnings were reported. While these could be pre-planned sales, the optics are lousy when the stock subsequently drops 9%.

Wall Street Still Sees a Path Higher

Despite the selloff, analyst conviction hasn’t cracked. Of the 26 analysts covering Cisco, 17 rate it Buy or Strong Buy, with zero Sell ratings. The consensus price target of $88.81 represents meaningful upside, and some targets go higher. KeyBanc maintained a Buy rating with an $87 target, while one bullish outlier sees the stock reaching $182 driven by AI infrastructure refresh cycles.

The bull case rests on several pillars. First, Cisco is winning AI infrastructure deals. The $2.1 billion in orders from hyperscalers represents significant acceleration, and the company just launched its Silicon One G300 switch targeting AI workloads. Second, a massive campus networking refresh cycle is underway, with product orders up 18% year-over-year. Third, the next-generation firewall market is growing at a 12% annual rate through 2031, and Cisco remains a dominant player.

The valuation case is also compelling. Cisco trades at a forward P/E of 18x, well below its trailing P/E of 28x, implying the market expects earnings growth. The PEG ratio of 1.3 suggests the stock is reasonably valued relative to its 31% year-over-year earnings growth. Add in a 2.2% dividend yield and aggressive buybacks, and you have a capital return story that appeals to value-oriented investors.

The Numbers

Current Situation:

• Current Price: $76.85
• Average Analyst Target: $88.81
• Implied Upside: 16%
• Number of Analysts: 26
• Recent Performance: Down 9.4% over one week

Analyst Ratings:

• Strong Buy: 4
• Buy: 13
• Hold: 8
• Sell: 0
• Strong Sell: 1

Comparison to S&P 500:

• CSCO Year-to-Date: +0.3%
• S&P 500 Year-to-Date: -0.02%

The data shows strong analyst conviction despite recent weakness. Seventeen of 26 analysts maintain Buy ratings, and the stock has actually outperformed the S&P 500 year-to-date despite the recent drop. That suggests the selloff is creating a potential entry point if you believe in the long-term thesis.

Key Questions Before the Next Earnings Call

The bull case strengthens if management can demonstrate that AI infrastructure wins offset margin pressure from memory costs and that the SaaS disruption thesis is overblown. The company has 40 years of customer relationships, generates massive cash flow, and is positioned in critical infrastructure that enterprises can’t easily replace. If the campus refresh cycle accelerates and AI orders continue growing, analysts could be right about upside.

However, concerns remain if operating margins continue compressing and free cash flow keeps declining. The 19% drop in operating cash flow is a red flag, and the coordinated insider selling on February 10 doesn’t inspire confidence. If executives are reducing exposure at $87 and the stock is now at $77, that’s worth paying attention to.

Investors may want to monitor the next earnings call to see how management addresses margin guidance and capital allocation. The risk/reward might be attractive at current levels, but the key question is whether the bull case is playing out operationally, not just theoretically. The gap between the stock price and analyst targets is real, but so are the questions about whether traditional networking companies can maintain their economics in an AI-first world.