The shares of technology giant Cisco Systems (CSCO) have received a significant upgrade from analysts at Citigroup (C).

Analysts at Citi raised their rating on CSCO stock to “Buy” from “Neutral” and raised their price target on the stock to $62 from $52. In a note to clients, analysts said Cisco Systems, which sells networking hardware, software and telecommunications equipment, is expected to benefit from widespread adoption of artificial intelligence (AI) in the future.

According to Citigroup, AI currently accounts for just 2% of Cisco's revenue, but the company is expected to see strong growth in the coming years as its Ethernet switches are increasingly used to connect AI microchips and processors. Cisco is a leading provider of Ethernet switches that connect computers, routers and servers to local networks.

Growth through AI

Cisco Systems has forecast $1 billion in additional AI orders for the current fiscal year. In August, Cisco said it was seeing strong demand for networking equipment and announced a plan to focus more on AI and cybersecurity, two areas where the company sees future growth opportunities.

Citigroup's upgrade contributed to a 4% rise in CSCO shares on October 16. This increase is certainly welcome news for Cisco shareholders, who have watched the stock underperform the broader market all year. Cisco Systems shares are up 15% so far in 2024, trailing the 22% rise in the benchmark S&P 500 index.

Is CSCO Stock a Buy?

Cisco Systems shares are unanimously rated “Moderate Buy” by 17 Wall Street analysts. This rating is based on nine Buy and eight Hold recommendations made over the past three months. There are no sell ratings for the stock. The average CSCO price target of $57.87 implies a 2.64% upside from current levels.

Read more analyst reviews on CSCO stock