10 Stocks on Jim Cramer’s Radar

7. Cisco Systems, Inc. (NASDAQ:CSCO)

Cramer commented on Cisco Systems, Inc.’s (NASDAQ:CSCO) recent acquisition of Splunk. Here’s what he had to say:

“Cisco seems poised for a breakout, doesn’t it? Yeah. This is the CSCO… They’re the network of choice for all sorts of AI and non-AI users. Ever since Cisco bought Splunk earlier this year, it’s been able to offer a cornucopia of analytics. That’s a powerful combination and one that can surprise to the upside.”

Cisco (NASDAQ:CSCO) designs and sells networking products and services for the communications and IT industry. In March, the company completed its acquisition of Splunk, a cybersecurity firm. This acquisition, the largest in its history, is part of the company’s broader strategy to strengthen its software business, particularly in response to growing demand driven by advancements in artificial intelligence.

During the company’s last recent earnings call, management highlighted the positive impact of the Splunk acquisition, noting that it contributed to impressive margins. The company reported a gross margin of 67.5%, the highest the company has seen in 20 years. Splunk played a significant role in this performance, generating around $960 million in revenue during the fourth quarter, which aligned with management’s expectations.

The acquisition of Splunk has also had a noticeable impact on Cisco’s (NASDAQ:CSCO) recurring revenue. For the fourth quarter, of the company’s total annualized recurring revenue of $29.6 billion, $4.3 billion was attributable to Splunk. For the fiscal year 2024, Splunk contributed about $1.4 billion in revenue following the closure of the deal in March.