Cisco

Cisco’s blended gross margin was 64.9% in FY25, with product margin at 63.7% and services at 68.5%. This level of profitability evidences some pricing power, especially in software and services, yet hardware remains price sensitive. Product margin drivers included positive mix and Splunk, offset by pricing pressure and a supplier-related charge.

The growing software stack (Splunk Enterprise Security and Observability, AppDynamics, ThousandEyes) and security architecture upgrades (Hypershield) expand Cisco’s ability to price to value over time. We see headroom in software suites and high-performance AI fabrics, partially constrained by intense competition in DC switching.