We recently published a list of Top 10 Buzzing AI Stocks to Watch Now. In this article, we are going to take a look at where Cisco Systems, Inc. (NASDAQ:CSCO) stands against other top buzzing AI stocks to watch now.
Doug Clinton, Deepwater Asset Management co-founder, said in a latest program on CNBC that the AI trade is still intact but the market is going through a period of “doubt” and many major AI stocks have lost their momentum.
“The vibe has shifted, and I think investors, more broadly, almost want to believe the AI trade is over. They’re looking for evidence, reasons to doubt. That’s the hard part for this trade right now—momentum has lost its momentum. From our perspective, the AI trade is still real. I don’t think this boom is over; I still see two to four years ahead. But in every technology-driven boom, we go through periods of doubt. That’s a healthy part of the cycle, and we just need to work through it.”
When asked about high valuations, the analyst said many of the AI stocks have “reasonable” valuations and upside.
“If you look at the hyperscalers, I think their valuations are still largely reasonable, even though they make up a big share of the market, which concerns some investors. We’re talking about mid-20s PEs for them. Some of the more growth-driven momentum names still have upside. Their multiples look expensive now, but as they continue to grow—and that’s the key question—those multiples will actually appear higher now than they will in the future.”
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For this article, we picked 10 AI stocks the market is talking about these days. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points(see more details here).
Engineers using the latest Cisco TelePresence technology to collaborate with colleagues around the world.
Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Investors: 84
Dan Niles, Niles Investment Management founder, explained on CNBC why Cisco Systems, Inc. (NASDAQ:CSCO) is one of his top picks this year.
“Cisco is one of my top five picks entering this year, and what I said was, look, the last two years have been about spending on AI infrastructure. This year, I think, is going to be more about companies getting access to all of that data being created and moving it around, which is why Cisco and Adtran, which is more on the telecom side, were two of my top five picks. Both stocks have been given up for dead, much like Oracle was several years ago when I made that one of my top five picks. It’s gone from, you know, “who cares about Oracle,” to maybe it’s a viable competitor in cloud data centers, and I think that’s how Cisco is going to transform. At a 17 times PE with the S&P trading at 26 times, if they’ve actually gotten their act together — which I think they have because of some of the acquisitions they’ve made several years ago that are now helping them to produce very competitive products — you’re seeing that in the order growth. Why can’t a 17 times PE go to a market multiple or above, which is where Oracle is trading? That’s how I think about Cisco.”
GreensKeeper Asset Management stated the following regarding Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2024 investor letter:
“In the third quarter, we decided to exit our investment in Cisco Systems, Inc. (NASDAQ:CSCO), as we believed the stock had become fully valued and reallocated the capital to one of our international positions. We also initiated a new position in a Canadian company shortly after the quarter ended. As we may still accumulate shares, we will defer discussing this new holding for the time being. Our top ten positions are detailed in the table below. Further portfolio disclosures, including performance statistics, are available on the pages immediately following this letter.”
Overall, CSCO ranks 7th on our list of top buzzing AI stocks to watch now. While we acknowledge the potential of CSCO as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CSCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
