Track market-moving stories before they get noisy

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Cisco Systems (NASDAQ:CSCO | CSCO Price Prediction) has quietly become one of the most compelling AI infrastructure plays in the market, even as retail chatter has turned sour.

The company just posted record quarterly revenue of $15.8 billion, raised full-year guidance, and told investors it now expects to book $9 billion in AI infrastructure orders from hyperscalers in FY26. Yet Reddit sentiment sits firmly bearish. Our proprietary model sides with management.

The 24/7 Wall St. price target for Cisco is $133.66, implying 13.79% upside from the current $117.46. Our recommendation is buy, with confidence at 90%.

24/7 Wall St. Price Target Summary Metric Value Current Price $117.46 24/7 Wall St. Price Target $133.66 Upside 13.79% Recommendation BUY Confidence Level 90% The Stock Has Nearly Doubled Since April Cisco is up 54.12% year to date and 73.17% over the past year, though shares have cooled 3.05% over the last week and trade about 10% off the 52-week high of $130.37.

The catalyst was the May 13 earnings release, where CSCO delivered its fourth consecutive EPS beat at $1.06 and revenue growth of 11.96% year over year. The stock jumped 13.41% on earnings day. Networking revenue surged 25%, and total product orders climbed 35%. Management raised FY26 revenue guidance to $62.8 billion to $63 billion and EPS to $4.27 to $4.29.

The Case for $140+ The bull case rests on AI infrastructure durability. CFO Mark Patterson told analysts “it’s reasonable to expect we will recognize at least $6 billion of revenue in FY ’27” from hyperscale AI alone. Acacia optics orders topped $1 billion in Q3, and Cisco booked five new Silicon One design wins with hyperscalers.

CEO Chuck Robbins said “Cisco is well-positioned as the critical infrastructure for the AI era.” Enterprise data center switching orders jumped over 40%, and public sector orders rose 27%. Our bull scenario points to $140.03, a 19.22% return.

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The Risks Worth Watching The trailing P/E of 38 is rich for a company whose long-term model is 4% to 6% growth in totality. Non-GAAP gross margins compressed 260 basis points on AI hardware mix, and Cisco is absorbing up to $1 billion in restructuring charges. Hyperscaler concentration is real: strip out webscale and order growth was 19%, of which 4 to 5 percentage points came from price increases rather than unit growth.

Insider activity has skewed net selling across 44 recent transactions. That said, bulls would note Patterson said “gross margins have stabilized” and the restructuring reinvests into silicon and optics, where Cisco is winning. Our bear case lands at $111.02.

Cisco Price Prediction 2026-2030 The 24/7 Wall St. price target of $133.66 reflects a buy with 90% confidence. The scale tips on AI order momentum: a jump to $9 billion of hyperscaler orders from an initial $5 billion plan represents a real backlog with a $6 billion FY27 revenue floor.

The bullish thesis holds if hyperscaler capex sustains through 2027 and Silicon One keeps taking share. The bearish scenario plays out if enterprise pull-forward reverses in FY27 or memory costs re-inflate.

Year 24/7 Wall St. Price Target 2026 $133.66 2027 $145.00 2028 $158.00 2029 $170.00 2030 $180.89 These projections assume Cisco continues executing on its AI infrastructure roadmap and campus refresh cycle. Significant upside or downside could result from hyperscaler capex trends and Silicon One share gains.

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Key Takeaways DDOG is expanding its platform and AI observability capabilities, supporting customer adoption.CSCO strengthened observability through Splunk, growing ARR and subscription revenue.DDOG trades at a valuation premium to Cisco despite both benefiting from observability demand. Datadog (DDOG - Free Report) and Cisco Systems (CSCO - Free Report) are key players in the growing observability market, helping enterprises monitor and optimize complex IT environments. As cloud adoption, AI workloads and digital transformation initiatives accelerate, organizations are generating larger volumes of infrastructure, application and security data, driving demand for real-time monitoring and analytics solutions.

Observability platforms have become essential for maintaining performance, reliability and security across modern technology stacks. While Datadog offers a cloud-native observability platform, Cisco has strengthened its position through the Splunk acquisition, expanding its reach across observability, security and AI operations. Both companies are well-positioned to capitalize on the expanding observability opportunity.

Let's examine the fundamentals and growth drivers of both companies to determine which stock offers a better long-term investment opportunity.

The Case for DDOGDatadog continues to strengthen its position in observability through a platform expansion strategy that is driving higher customer adoption and spending. DDOG offers 26 products spanning infrastructure monitoring, application performance monitoring, log management, security and AI observability. This breadth has supported cross-selling momentum, with five products generating more than $100 million in annual recurring revenue (ARR) and three additional products contributing between $50 million and $100 million in ARR. Total ARR surpassed $4 billion in the first quarter of fiscal 2026, highlighting the increasing scale of the platform.

DDOG has been benefiting from strong enterprise demand. Revenues for first-quarter of fiscal 2026 increased 32% year over year, while free cash flow margin remained at 29%. Growth has been broad-based, with the non-AI customer cohort accelerating to the mid-20% range, indicating that demand extends beyond AI-native customers.

AI observability is emerging as a key catalyst. Datadog has expanded its capabilities through GPU Monitoring, LLM Observability and Bits AI offerings, enabling customers to manage complex AI environments. Adoption trends remain encouraging, with Datadog MCP Server tool calls quadrupling sequentially during the fiscal first quarter. DDOG is expanding security observability capabilities to address AI-specific threats while introducing deployment options that help customers meet data residency and compliance requirements.

Further growth is expected to be supported by FedRAMP High certification and a planned U.K. data center expansion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $4.31 billion, indicating 25.7% year-over-year growth.

The Case for CSCOCisco has been strengthening its observability position through the integration of Splunk, enabling it to offer a broader platform spanning observability and security analytics. Unlike Datadog, Cisco benefits from a large installed base across networking, data center and security infrastructure, creating opportunities to embed observability capabilities deeper within enterprise environments. This integrated approach is expected to support cross-selling and customer retention as organizations increasingly seek unified visibility across their IT operations.

CSCO has also been benefiting from strong enterprise technology spending trends. In the third quarter of fiscal 2026, revenues increased 12% year over year to $15.8 billion, while product orders grew 35% year over year, reflecting broad-based demand across enterprise, public sector and cloud customers. Cisco's recurring revenue profile continues to strengthen, with ARR reaching $31.2 billion and subscription revenues accounting for 49% of total revenues.

Agentic security observability is emerging as a key catalyst. Cisco has been expanding capabilities that combine observability, threat detection and automated response across enterprise environments. Hypershield and AI Defense extend visibility across AI deployments, while the pending acquisitions of Galileo and Astrix are expected to add agentic identity, access management and behavior monitoring capabilities, strengthening the company's observability and security portfolio.

Further growth is likely to be supported by Cisco's expanding software mix, strong cash generation and deep enterprise relationships. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $62.95 billion, indicating 11.11% year-over-year growth.

DDOG vs. CSCO: Price Performance and ValuationYear to date, shares of CSCO have jumped 55.2%, trailing DDOG's 64% return. Both stocks have benefited from strong AI-related demand, with Datadog's gain led by its AI observability catalysts and Cisco's supported by its broader networking, security and AI infrastructure base.

DDOG Outperforms CSCO YTD
Image Source: Zacks Investment Research

DDOG currently trades at a forward 12-month price-to-sales (P/S) multiple of 16.86X, well above CSCO’s 7.01X. Datadog's premium to Cisco appears difficult to justify given Cisco's expanding observability footprint through Splunk, larger recurring revenue base, broader enterprise reach and growing software subscription business.

DDOG Vs CSCO : Forward 12-Month P/S Valuation
Image Source: Zacks Investment Research

ConclusionBoth Datadog and Cisco are well-positioned to capitalize on the growing observability opportunity. While Datadog continues to deliver robust growth, Cisco has significantly strengthened its position through the integration of Splunk. Given its larger recurring revenue base, broader enterprise footprint and more attractive valuation, CSCO appears to offer a more compelling investment opportunity than DDOG.

DDOG and CSCO carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.