Cisco Systems Inc. has projected lower revenue growth for the upcoming year than previously anticipated by analysts. Despite this, the company's stock price continues to rise.

For the new fiscal year, Cisco expects revenue between $57 billion and $58.2 billion, representing either flat growth or a 2% increase. Analysts tracked by FactSet had predicted revenue of $58.4 billion.

However, Cisco shares have increased by 4% following the release of these figures, as analysts believe the outlook to be conservative.

Melius Research analyst Ben Reitzes notes that while the projected 1% revenue growth for fiscal 2024 suggests a decline in the second half, it may actually be more positive than anticipated due to several factors. Reitzes points to the company's order trends, highlighting a 30% sequential rise in orders, which is higher than usual for the fourth quarter. Cisco also revealed $500 million in orders related to artificial intelligence, further adding to the potential. Reitzes rates the stock as a buy with a target price of $68.

Oppenheimer's Ittai Kidron is also optimistic about future growth potential. Kidron believes that although the forecast indicates a slowdown in top-line growth as Cisco's backlog normalizes in the first half of the fiscal year, strong demand and software orders suggest that order trends will remain robust in the second half of the year. Additionally, Kidron mentions the company's opportunities for annual-recurring-revenue renewals, progress in high-growth markets like AI, and deeper penetration into Webscale customers as factors that contribute to their optimism. Kidron has an outperform rating on Cisco shares with a target price of $58.

While Cisco expects slower revenue growth, analysts see potential for upside and remain positive about the company's prospects going forward.

Evercore ISI's Amit Daryanani shares a positive perspective on Cisco's future. According to Daryanani, while some may focus on the implied order trajectory and second-half revenue trends, Cisco's fiscal 2024 guidance appears to be conservative, providing room for potential upside. Daryanani highlights factors such as share gains in security & networking, hyperscale ramps, order acceleration in the second half, improved gross-margin/operating leverage, and buybacks. Consequently, Daryanani has boosted his target price to $63 and maintains an outperform stance.

However, others approach Cisco's outlook with caution. James Fish of Piper Sandler emphasizes that although there were more than 30 mentions of AI on the call, material Ethernet contribution is not anticipated until fiscal 2025. Fish points out that Cisco's strategy focuses on AI, cloud, and security through a recurring revenue model. Despite this, Fish mentions a challenging year ahead due to backlog normalization, a potentially overestimated Street's estimates for FY24-25, the macro-environment, and competitive landscape. Fish maintains a neutral stance and a $53 target price.

Alex Henderson from Needham presents an interesting perspective on Cisco's outlook. He suggests that investors can interpret Cisco's outlook either as conservative or as a sign of the company's challenges once it resolves its backlog. According to Henderson, if the bar is set low enough and investors can enjoy upside to revenue and earnings per share, the stock might perform well. On the flip side, however, the outlook for the second half of the year indicates potential earnings declines. Henderson notes that it's challenging to invest in a stock with the anticipation of three quarters of flat to down earnings. Consequently, Henderson maintains a hold stance on Cisco's stock.

Read: "This is no longer a buy-the-dip market." Why this Goldman Sachs veteran is worried about the stock market.

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