Broadcom (AVGO Quick QuoteAVGO - Free Report) and Cisco Systems (CSCO Quick QuoteCSCO - Free Report) are benefiting from strong demand for AI infrastructure, data center build-outs and an increasing cybersecurity threat landscape. Both offer high-performance networking hardware essential for connecting AI accelerators. In data centers, both companies are leveraging the next-generation AI Ethernet fabric for scalability and openness. 

AI infrastructure solutions from AVGO and CSCO are being integrated into platforms provided by hyperscalers and enterprise cloud providers, including Google Cloud, Microsoft Azure and AWS. Both Broadcom and Cisco are investing in green and scalable infrastructure architectures to address the need for growing AI traffic. Both companies offer solutions that cater to core data centers, as well as edge environments.

Gartner projects AI spending to hit $1.48 trillion in 2025 and $2.02 trillion in 2026 compared with $987 billion in 2024. Both Broadcom and Cisco are well-positioned to benefit from this strong spending expectation on AI. Strong prospects have been driving performance, with shares of Broadcom and Cisco appreciating 56.2% and 20.6% year to date, respectively.

AVGO and CSCO Stock’s Performance

Image Source: Zacks Investment Research

So, Broadcom or Cisco, which is leading the charge? Let’s find out.

AVGO Rides on Strong Infrastructure Portfolio

Broadcom is benefiting from strong demand for XPUs, which are a type of application-specific integrated circuits (ASICs) necessary to train Generative AI models. Alphabet and Meta Platforms are notable users of Broadcom’s ASICs. XPUs accounted for 65% of AI revenues in the third quarter of fiscal 2025. Consolidated backlog hit $110 billion, and the company has secured more than $10 billion of orders for AI racks based on XPU demand. Broadcom expects fourth-quarter fiscal 2025 AI revenues to jump 66% year over year to $6.2 billion. The company’s deal with OpenAI to develop and deploy 10 gigawatts of custom AI accelerators is a noteworthy development.

AVGO’s networking portfolio is gaining from strong demand for Tomahawk 5 and 6 products, as well as the Jericho 4 Ethernet fabric router. Tomahawk 6 – Davisson (TH6-Davisson), the company’s third-generation Co-Packaged Optics (CPO) Ethernet switch, is now being shipped. TH6-Davisson is specifically designed for the accelerating demands of AI networking, as it delivers an unprecedented 102.4 terabits per second of optically enabled switching capacity.

Broadcom’s security offerings are a part of its broader Infrastructure Software solution that accounted for 42.5% of revenues in the third quarter of fiscal 2025. Broadcom’s focus on delivering AI-powered, proactive security to stay ahead of evolving cyber threats has been noteworthy.

CSCO Benefits From Strong Security Demand, AI Push

Cisco’s aggressive AI push and growing security dominance are driving prospects.  AI Infrastructure orders from webscale customers hit $2 billion in fiscal 2025, double the management’s original expectation. The company is expanding its AI portfolio for data centers with new solutions like the Unified Nexus Dashboard, Cisco Intelligent Packet Flow, configurable AI PODs and 400G bidirectional optics. Cisco’s security business is benefiting from strong demand for both Cisco Secure Access, Hypershield and XDR.

Cisco’s expanded partnership with NVIDIA, under which the companies plan to offer solutions that help build AI-ready data center networks, is a game-changer. Integration of Cisco Nexus switches with NVIDIA’s Spectrum-X architecture is offering low-latency, high-speed networking for AI clusters, driving enterprise AI orders. The Cisco Secure AI factory with NVIDIA provides a trusted blueprint for building secure AI-ready data centers for enterprises, sovereign cloud providers and newly emerging Neocloud providers. 

An expanding portfolio bodes well for Cisco’s growth trajectory. The company recently introduced new agentic capabilities in Cisco AI Assistant, RoomOS 26 for Cisco Devices, and purpose-built integrations across Cisco devices and the Webex Suite. Cisco announced enhancements to the Webex Customer Experience portfolio, including a new AI-powered tool for supervisors. Expected to be available in early 2026, the enhancements will unify quality management across the contact center. The company is also expanding the Webex ecosystem in India and the Kingdom of Saudi Arabia.

AVGO and CSCO’s Earnings Estimate Revision Positive

The Zacks Consensus Estimate for AVGO’s fiscal 2025 earnings is pegged at $6.72 per share, up 1.7% over the past 60 days, indicating a 38% increase over fiscal 2024’s reported figure.
 

The consensus mark for Cisco’s fiscal 2026 earnings has increased by a penny to $4.04 per share over the past 60 days, suggesting 6% growth over fiscal 2025’s reported figure.
 

Both AVGO’s and CSCO’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. Cisco’s average surprise of 3.86% is slightly better than AVGO’s surprise of 2.82%, reflecting a good quality of earnings beat on a consistent basis.

Valuation: CSCO is Cheaper Than AVGO

Both Cisco and Broadcom are overvalued, as suggested by the Value Score of C and D, respectively. 

However, in terms of forward 12-month price/sales, Broadcom shares are trading at 20.18X, significantly higher than Cisco’s 4.69X.

CSCO and AVGO Valuation

Image Source: Zacks Investment Research

Conclusion

Cisco’s aggressive AI push and an expanding portfolio are expected to boost top-line growth in the near term. Broadcom’s expanding AI portfolio, along with a rich partner base, is a key catalyst. Although both companies have a stretched valuation, strong AI spending prospects bode well for them.

Cisco currently carries a Zacks Rank #2 (Buy), which makes the CSCO stock a buy as compared with Broadcom, which currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.