SPLK - Cisco: AI And Splunk-Related Opportunities To Counter Soft Demand

2024-03-11 13:04:22 ET

Summary

• Cisco has partnered with Nvidia to help enterprises deploy AI infrastructures more rapidly while its acquisition of Splunk could be completed by the middle of this year.
• Nvidia's witnessing high demand for its H100 GPUs also plays to the advantage of Cisco's hyperscale-over-Ethernet AI switch and I identify around $3 billion of sales opportunities.
• The Splunk acquisition should help grow the topline as the cybersecurity market adapts to new dynamics because of the high cost of capital.
• On the other hand, this bullish thesis is also based on demand for Cisco's products like Nexus and Meraki picking up in the fiscal year 2025, after slumping for the last 2-3 quarters as customers consume inventories.
• A lot will also depend on how Splunk is integrated as there are some overlaps in observability, but, there is potential for cost synergies.

While all eyes are on Cisco Systems ( CSCO ) boosting capabilities in cybersecurity with the Splunk ( SPLK ) acquisition, less attention has gone to the partnership with Nvidia ( NVDA ) for deploying artificial intelligence, as illustrated below....

For further details see: