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Cisco Tops CIO Survey for Networking Despite Moderating Tech Spend

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CSCO$109.17 −3.93%

Cisco Systems, Inc. (NASDAQ:CSCO) ranked as the top vendor choice for networking in a third-quarter chief information officer survey conducted by Morgan Stanley, even as enterprise buyers indicated plans to moderate technology spending. Net vendor spend intentions dropped to +28% from +57% quarter over quarter, while data center purchase intentions eased to +37% from +55%. Cisco shares fell 4.08% to 109 USD.

The survey revealed shifting trends across key spending categories. Campus switching showed resilience as upgrade intentions rose to +36% from +33%, although Cisco customer retention slipped to 63% from 68%. In network security, spending intentions eased to +70% from +85%, while purchase intentions for Cisco security products fell to 47% from 57%. Meanwhile, Splunk sentiment improved, with 31% of noncustomers reporting a better view of the offering, up from 24%. Equipment price increases also created headwinds, with project delays rising from 2% to 13% during the quarter.

Morgan Stanley reiterated its Overweight rating and $135 price target on Cisco following the survey. Investors will watch whether Cisco can stabilize customer retention and translate improved Splunk sentiment into revenue growth as enterprise buyers navigate pricing pressure and project delays.

Key points

  • Cisco Systems, Inc. (NASDAQ:CSCO) ranked as the top networking provider in a third-quarter CIO survey conducted by Morgan Stanley.
  • Net vendor spending intentions fell from +57% to +28%, while data center purchase intentions decreased from +55% to +37%.
  • Campus upgrade intentions improved to +36% from +33%, even as Cisco customer retention declined to 63% from 68%.
  • Equipment price increases contributed to quarter-over-quarter project delays climbing from 2% to 13%.
  • Morgan Stanley maintained an Overweight rating and $135 price target for Cisco stock.

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Questions and answers

Why did Cisco Systems lead the CIO survey?

Cisco Systems ranked as the top choice for networking among chief information officers in Morgan Stanley's third-quarter survey, outperforming industry peers despite broader spending cutbacks.

How are enterprise technology budgets changing?

CIOs reported plans to moderate spending, with net vendor spend intentions falling to +28% from +57% and data center purchase intentions easing to +37% from +55%.

What is the price target for Cisco Systems stock?

Morgan Stanley retained its Overweight rating and $135 price target on Cisco Systems following the third-quarter CIO survey.