Meta Platforms (META) just handed the AI buildout a massive new catalyst by agreeing to buy advanced chips from Advanced Micro Devices (AMD) in a deal reportedly worth up to $100 billion over several years, focused on large-scale AI data centers. That kind of budget reshapes chip demand and forces a rethink of the networks, switches, and security layers needed to keep AI models fed with data at high speed.

As the spotlight shifts, the AMD-Meta deal hitting the tape sent networking names tied to AI infrastructure higher, and Cisco Systems (CSCO) quickly stood out as one of the clear winners. CSCO stock has pushed to new highs on growing AI-focused orders and still offers an annual dividend payout of $1.64 per share. That combination is exactly why this networking stock is set to benefit from the AMD-Meta deal while continuing to pay a dependable dividend. Let’s dive in.

Cisco’s Fundamentals Back an AI-Powered Upside

Cisco Systems is a San Jose, California–based networking and cybersecurity company that builds the hardware and software underpinning global internet and data-center traffic. It carries a market capitalization of roughly $313 billion and returns cash to shareholders through an annual forward dividend of $1.64 per share, translating to a 2.06% yield. 

Shares change hands near $78 as of Feb. 26, up 3% year-to-date (YTD) and 24% over the past 52 weeks.

This valuation embeds a trailing price-to-earnings (P/E) ratio of 24.2 times against a sector median of 21.8 times and a price-to-sales (P/S) multiple of 5.5 times versus a sector median of 3.1 times, suggesting investors are willing to pay a reasonable premium for Cisco’s earnings quality and leverage to AI networking. 

The latest earnings release on Feb. 11 detailed record quarterly revenue of $15.3 billion, rising 10% year-over-year (YOY) as customers accelerated spending on high‑performance networking and AI‑ready infrastructure. It also showed GAAP EPS climbing to $0.80, up 31% YOY, while non‑GAAP EPS reached $1.04, an 11% gain that highlighted profitable growth rather than just top‑line expansion. 

The report outlined a GAAP gross margin of 65.0% and a non‑GAAP gross margin of 67.5%, levels that reflect strong pricing power and efficient cost management. The update further reported a GAAP operating margin of 24.6% and a non‑GAAP operating margin of 34.6%, both above the high end of prior guidance. That momentum is further supported by AI infrastructure orders from hyperscalers reaching $2.1 billion in the quarter.

Cisco’s Real-World AI Growth Drivers

The company has teamed up with Sharon AI and Nvidia (NVDA) to launch Australia’s first Cisco Secure AI Factory, a sovereign AI platform designed to keep all data and AI processing inside the country while still delivering high‑performance compute. This facility is powered by 1,024 Nvidia Blackwell Ultra GPUs, backed by VAST Data storage and NEXTDC data centers, with Cisco’s UCS servers, security stack, and Nexus Hyperfabric providing the networking and management layer. That combination is aimed squarely at enterprises and governments that want AI capacity comparable to hyperscalers but with strict control over data residency and security.​

Hardware innovation is matching that strategic push. Cisco recently unveiled its Silicon One G300 AI networking chip, a device built to handle the brutal east‑west traffic inside large AI clusters. The G300 delivers 102.4 terabits per second of switching capacity, more than double the previous generation, and uses Intelligent Collective Networking to keep GPUs talking efficiently by reducing dropped packets and rerouting traffic around congestion. 

This design, according to Cisco, can boost network utilization by 33% and cut AI job completion times by 28%, effectively squeezing more useful work out of every GPU dollar spent. The platform is rounded out with 1.6 terabit optics and 800G linear pluggable optics that cut power consumption by up to 50%, lowering switch power by about 30% and helping data centers stay within power and space limits as AI workloads scale.

Wall Street Sees More Room for This AI Income Play

Cisco’s next earnings release is slated for May 13, 2026, with Wall Street looking for fourth-quarter fiscal 2026 EPS of $0.85 on average versus $0.78 a year ago, making for an expected YOY growth rate of about 9%. The company's own Q3 fiscal 2026 guidance backs that optimism, calling for revenue between $15.4 billion and $15.6 billion and GAAP EPS of $0.73 to $0.77, alongside non‑GAAP EPS of $1.02 to $1.04. 

That internal confidence is being echoed and amplified by Evercore ISI analyst Amit Daryanani, who recently upgraded CSCO stock to “Outperform” and lifted his price target to $100 from $80. Daryanani sees clearer growth visibility and a stronger multi‑year earnings path as AI networking demand, campus refresh cycles, and margin improvement start to align. 

This isn’t a lone outlier call, either. A group of 25 analysts with coverage has a consensus “Moderate Buy” rating on CSCO stock. They tell the same story in numbers, as the average 12‑month price target sits at $88.45, implying roughly 11% potential upside from current levels.

Conclusion

All told, Cisco stands out as a straightforward way to tap into the AMD–Meta AI infrastructure push while collecting a dependable dividend stream. The company is booking meaningful AI orders, guiding to steady earnings growth, and drawing increasingly bullish price targets from Wall Street. For potential investors, CSCO stock still leans more toward “buy on dips” than “ring the bell and walk away.”

More news from Barchart

• Want to Invest Like Billionaire Bill Gross? 3 Income Stocks to Buy Now.
• This Networking Stock Is Set to Win on an AMD-Meta Deal — and It Pays a Dividend Too
• Coca-Cola or PepsiCo: Which is the Ultimate Choice for Generations of Income?
• Steer Clear of Dividend ETFs: Why Dividend Stocks Are Better Bought Individually