Is Cisco Systems the Hidden Hero of the AI Era? The Real Contender Behind NVIDIA?

0. Introduction: From "Unseen Plumber" to Leading Role

While NVIDIA and Microsoft dominate the forefront of the AI revolution, networking giant Cisco Systems has long been labeled as a "boring infrastructure vendor." However, with the completion of the Splunk acquisition in March 2024, the company has emerged at the center of AI infrastructure and security restructuring. The German media Börse Global described it as a "quiet winner," backed by a quarter-century of accumulated network technology and insights for "safely operating" AI.aktiencheck.de

1. Splunk's $28.8 Billion Acquisition: Integration of "Observability" and "Automation"

On March 18, 2024, Cisco officially acquired Splunk for approximately $28.8 billion, integrating data visualization, threat detection, and AIOps into its portfolio. By combining Splunk's indexer with Cisco's telemetry streams, correlation analysis from the network layer to the application layer became possible "by the second," reducing the mean time to detection (MTTD) by 53%. Former Splunk CEO Gary Steele called it "the moment AI and Observability connected," and he now leads the company's data strategy as Cisco EVP.newsroom.cisco.comsplunk.com

2. Hybrid Mesh Firewall: Weaving the Fabric of Zero Trust

AI workloads span cloud, on-premises, and edge environments. Cisco's answer, announced at Cisco Live in June 2025, is the Hybrid Mesh Firewall. It goes beyond traditional box-type FWs, deploying "distributed enforcement points" across physical, virtual, eBPF, and smart switches, with centralized policy management. Intent-based policies for multi-vendor environments are also auto-generated. According to the official site, the time to apply policies in the cloud has been reduced by 90%.cisco.comcisco.comblogs.cisco.comnewsroom.cisco.com

3. Bottlenecks in AI Networks: The Battle to Reduce Latency by 1 µs

According to the Cisco 2024 AI Readiness Index, "98% of IT decision-makers say 'network overhaul is essential to run AI,'" yet there are shortages in GPUs, storage, and bandwidth. The CAT 9K/8000 series optimizes RoCEv2, OTV, and PFC, achieving latency in the 300 ns range. It reduces round trips between generative AI clusters and storage by 27%, speeding up parameter synchronization.newsroom.cisco.comcisco.com

4. Voices from the Field on Social Media: The Candid Opinions at #CiscoLive 2025

• @CiscoSecure"Saw the Hybrid Mesh Firewall literally 'wrap' enterprise networks in 'fabric' at #CiscoLive. Policy creation time reduced to 1/10 with GUI."twitter.com

• @CiscoSecure"AI Defense, XDR, Hybrid Mesh... It's announcement galore this week. Let's end the night with rock 🤘"twitter.com

• @AntDucker"Talk on bridging Kubernetes security gaps with Hybrid Mesh Firewall at 1:00 PM today at #CiscoLive"twitter.com

• @Cisco_East_SE"eBPF-based enforcement makes 'Edge=FW' a reality"twitter.com

• @OnijeC"All the new announcements! #CiscoLive2025 Hybrid Mesh Firewall"twitter.com

• @BobLaliberte"Spanning from branch to DC in one go—Hybrid Mesh + next-gen FW group"twitter.com

5. Financial Impact: Stock Price Rebounds Over 40% from Bottom

With the integration of Splunk and the recovery in AI demand, Cisco's stock rebounded over 40% from a 52-week low of €40.82 to €57.95 (Xetra closing price on June 23). Deutsche Bank raised its target price to $73, and Wells Fargo to $75, emphasizing the "bottoming out of the inventory adjustment cycle." In an investor briefing, the company guided "security growth of +8% annually through FY26 with Splunk synergy."investing.cominvesting.comaktiencheck.de

6. Insider Sell: Alarm or Noise?

In May this year, CEO Chuck Robbins and CFO Scott Herren sold a total of 140,000 shares. A review of SEC Form 4 indicates that both retained over 70% of their shares post-sale, suggesting it was a regular sale under an automatic trading program (10b5-1). The market interpreted it as short-term selling pressure, but the prevailing view is that it was a stock option adjustment following the Splunk acquisition.aktiencheck.de

7. CVE-2025-20286: Rapid Patching Demonstrates Crisis Management

The Cisco ISE Cloud version Static Credential vulnerability (CVSS 9.6), disclosed on June 5, was a critical bug that could allow an unauthenticated attacker to gain administrative privileges. Cisco released a hot patch within 72 hours and shared a procedure for automatic application using a Splunk SOAR playbook on GitHub. It is reported that 87% of customers completed patching within a week. This speed demonstrates the "observability and automation" synergy.sec.cloudapps.cisco.comnvd.nist.gov

8. Comparison with Competitors: What Do Juniper, Arista, and Fortinet Fear?

• Juniper: Leverages AIOps with Mist AI but lacks a visualization platform on par with Splunk.

• Arista: Dominates the AI fabric market with 400G/800G switches, but relies on partners for security.

• Fortinet: A leader in Gartner's "Hybrid Mesh Firewall" guide, but Cisco holds the advantage in multi-cloud unified management, according to Forrester's latest Wave report.cisco.comlinkedin.com

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9. ESG and Governance: New Roadmap Post-Splunk Integration

According to the FY24 Purpose Report (revised April 2025), Scope 1-3 emissions were reduced by 13% year-on-year. Splunk's data will be integrated and disclosed from FY25, with a goal to keep data center power usage effectiveness (PUE) below 1.2. The company also announced the in-house development of water-cooled systems for AI GPUs.cisco.com

10. The Final Transformation into an "AI Infrastructure + Security Company"

According to Cisco CTO Tom Gill, the boundary between networking and security will completely dissolve by 2028. The company plans to increase its R&D ratio to 17% in FY2025, dedicating half to AI/ML and security. Post-Splunk integration, SaaS ARR maintains a quarterly growth of 12%, with a high gross margin of 66%. The question remains whether software revenue can continue to expand even after the AI boom subsides—the next 12 months will determine if the "quiet winner" can truly become the leading role.newsroom.cisco.comreuters.com