Morgan Stanley Highlights Cisco's Supply Chain Edge in AI Networking
Cisco Systems (CSCO) is gaining traction as a key player in the artificial intelligence infrastructure buildout, with its stock up nearly 46% year to date. A recent Morgan Stanley report highlights how Cisco has secured an advantage over rivals by leveraging strong supplier relationships and financial strength during a global parts shortage. The firm attributes Cisco's success to three factors: a robust balance sheet allowing upfront commitments, larger purchase volumes than smaller competitors, and direct ties with TSMC (TSM), the world’s largest chipmaker. These advantages are expected to drive significant growth in Cisco’s chip production at TSMC by fiscal 2027. Morgan Stanley also sees potential for continued demand as older Catalyst switches reach end-of-life status over the next two years, and notes emerging opportunities with AI scale-across technology that connects distributed GPU clusters. The firm maintains an Overweight rating on Cisco with a $135 price target.
Topics: artificial intelligence infrastructure Cisco Systems Morgan Stanley research semiconductor supply chains