Cisco shares have hit their highest since the dot-com era. What attracted investors?

Cisco shares surpassed their high for the first time in more than 25 years since the dot-com era. The 2000 record has long remained a symbol of the dot-com bubble and a benchmark for the Nasdaq 100. The network equipment maker's rally was also supported by the general strengthening of the U.S. market after the Fed rate cut and growing investor interest in companies that could benefit from the AI boom.

On December 10, shares of network equipment manufacturer Cisco added 0.9% to $80.25. This price exceeded the maximum mark, which Cisco securities reached on March 27, 2000, - $80.06. That day Cisco also overtook Microsoft in market capitalization, becoming the most expensive public company in the world, notes CNBC. The value of Cisco securities in 2000 for many remained a symbol of the height of the dot-com bubble and served as a benchmark for the Nasdaq 100 until the end of 2015, Bloomberg writes .

Back then, CNBC reminds us, Cisco's stock on the market was one of the main bets on the growth of the Internet: companies going online needed switches and routers that Cisco made. In the two years leading up to the 2000 record, Cisco stock soared nearly 600%, pushing the company's capitalization above $500 billion, Bloomberg notes. When the dot-com bubble eventually burst, Cisco lost about 90% of its market value, hitting a low of about $60 billion in late 2002.

Since then, Cisco's stock has risen more than 800%, although the company's market value was still more than 40% below its peak, the agency points out. Nevertheless, CNBC continues, unlike many Internet companies at the time, Cisco was able to hold its own in the market.

"It's a clear reminder that recovering from a bubble can take a very long time. A good example is the Japanese stock market, which took decades to recover from the bubble of the late 1980s," Deke Mullarkey, managing director of SLC Management, told Bloomberg. - When investors lose confidence because of a painful collapse, it can take years to regain that confidence." Now Cisco's stock is up again, and that's "a sign of confidence," the analyst noted: "Although now the company has become more of an 'infrastructure' company than an innovative one. Apparently, this is what investors wanted to see," he added.

Since the beginning of 2025, Cisco shares have risen about 36%, outperforming the Nasdaq, which has added about 22%. After the growth on Wednesday, December 10, the capitalization of Cisco reached $317 billion - the company now ranks 13th among the largest U.S. technology corporations, notes CNBC. In recent years, its securities have noticeably lagged behind the giants that have become the center of the new AI boom, emphasizes Bloomberg.

Cisco's rise to a new record coincided with the fact that market participants are increasingly drawing parallels between the current rally of the "Magnificent Seven" and the period of the late 1990s, when the market also "stood at historic highs," Bloomberg points out. Back then, Cisco was one of the "Four Horsemen of the Nasdaq" - companies that drew huge investor interest in the late 1990s, along with Microsoft, Intel and Dell.

The growth on December 10 took place against the background of a general rise in the U.S. market after the Fed reduced the ratefor the third time in a row. The S&P 500 index rose by 0.7%, the Nasdaq 100 by 0.4%.

Also, the latest stage of Cisco's stock rally is related to the company's favorable revenue forecast, published in November, emphasizes Bloomberg. It reinforced expectations that investments in AI infrastructure will accelerate the company's growth.

Cisco expects to capitalize on the AI boom: in November, CEO Chuck Robbins reported quarterly AI infrastructure orders of $1.3 billion from major Internet companies. Total revenue approached $15 billion - up 7.5% year-over-year, up from 66% in 2000.

The company expects revenue could reach $61 billion in the current fiscal year (through July) - $1 billion above its previous forecast and above Wall Street expectations.

UBS analyst David Vogt, who raised his recommendation on Cisco shares to "buy" on the eve of the report in November, pointed to the growing demand for infrastructure products for AI, Bloomberg writes. However, doubts remain on Wall Street as to whether the AI boom can continue at its current pace and whether companies are correctly reporting AI costs, Bloomberg notes.

This article was AI-translated and verified by a human editor