Cisco and Supermicro Are Joining Forces in the AI Data Center Boom. How to Play Their Stocks Now.

Throughout the buildout of artificial intelligence, the biggest issue that companies keep banging their heads on has been computing capacity. Big tech companies are spending hundreds of billions of dollars this year on servers, chips, and networking equipment, and it appears they’ll be spending even more in 2027.

That’s why some companies are getting creative—and creating partnerships—in an effort to stand out from the crowd and get AI hardware in the hands of data centers. One recent example is Cisco Systems (CSCO), which is expanding its Secure AI Factory with Nvidia (NVDA) by including a partnership with Super Micro Computer (SMCI).

The Cisco AI Factory with Nvidia is a full-stack infrastructure system that helps companies build, deploy, and secure AI workloads. It combines AI infrastructure with full-stack security and is built to deliver faster agentic and physical AI applications. 

Cisco says with its partnership with Supermicro, customers will be able to deploy rack-to-fabric liquid cooling that features Cisco’s liquid-cooled AI networking systems alongside Supermicro’s liquid-cooled servers. Cisco expects to offer the solution in October.

Are Cisco and Supermicro good investments in 2026 as they seek to carve a place in the AI buildout? Let’s look closer.

Cisco (CSCO): Brings the Networking Infrastructure

Cisco is a San Jose, California-based technology company that sells networking products such as switches, routers, wireless systems, and software used to manage enterprise and cloud networks. The company also provides cybersecurity services such as firewalls, network security, and identity management and has a growing data center segment that includes networking and infrastructure management for AI workloads. The company has a market cap of $440 billion.

Shares in the last 12 months are up 60% as the company saw increasing demand for its networking and AI infrastructure hardware. 

Shares trade at a forward price-to-earnings (P/E) ratio of 21.4, which is just over the P/E of the broader S&P 500 Index ($SPX) and very close to the stock’s five-year P/E mean. So historically, shares are fairly valued right now. 

Revenue for the fiscal fourth quarter of 2026 (ending July 25) was $17.3 billion, up 18% from a year ago and topping the high end of the company’s guidance. Non-GAAP earnings per share came in at $0.97, up from $0.64 a year ago. For the full year, Cisco reported revenue of $63.3 billion, up 12% from a year ago, with net income of $13.3 billion and EPS of $3.33, up from $2.55 a year ago. 

The company projected revenue of $18 billion to $18.2 billion in the fiscal first quarter of 2027 and full-year guidance of $72.2 billion to $73.4 billion.

Analysts have a consensus “Moderate Buy” rating for CSCO stock, with a mean price target of $134.14, representing potential upside of 22%.

Supermicro (SMCI): Brings the Servers

Supermicro, which is also based in San Jose, is known for its custom server solutions that are often used in data centers to hold and bundle GPUs and CPUs that are used in high-level computing. Its server solutions are also used for high-end workstations and storage networks. The company has a market cap of $23 billion.

But despite its role in AI infrastructure, Supermicro has been a troubled stock, down 15% over the last year. There are possible regulatory and legal issues—the company’s offices in Taiwan were raided this year as part of an ongoing investigation related to allegations of smuggling of Nvidia GPUs into China. In addition, the U.S. indicted Supermicro co-founder Yih-Shyan “Wally” Liaw and two others on charges they attempted to divert $2.5 billion worth of Nvidia-powered servers to China in violation of U.S. export controls. The company has denied wrongdoing, is cooperating with authorities, and said an internal investigation cleared current management of wrongdoing.

The fallout has taken a toll, even though the company is seeing strong demand for its products. SMCI’s revenues were $11.1 billion in the fiscal fourth quarter, up 91% from a year ago. Net income was $1.17 billion, up from $195 million a year ago, and earnings of $1.70 per share were a huge improvement from $0.41 last year.

Full-year revenue was $39.1 billion, up from $22 billion in fiscal 2025, and earnings of $3.63 were up from $2.06 per share a year ago. 

The shadow over SMCI stock, however, has many analysts sitting out. The stock has a consensus rating of “Hold” by 20 analysts, with the majority recommending that investors hold. Six analysts have “Buy” ratings and three have “Sell” ratings, with a consensus price target of $41.38 that only suggests a potential 10% upside.

On the date of publication, Patrick Sanders had a position in: NVDA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.