The legacy tech stocks are seen as bargains, with Cisco trading at less than 17 times estimated earnings, compared to the higher multiples of the leading tech companies. Their dividend yields are also notably high for the tech sector. Despite slower growth projections compared to the overall tech industry, these companies provide a defensive investment strategy with potential for AI-related growth. Analysts suggest that these mature companies, overshadowed by the major tech players, offer a safer way to invest in AI while maintaining stability in earnings.
Key takeaways:
- Legacy tech companies like Cisco, IBM, and Oracle are gaining investor attention due to their involvement in AI and offering cheaper valuations and appealing dividend yields compared to megacap tech stocks.
- Cisco, IBM, and Oracle have shown strong performance in 2025, with Cisco's shares reaching their highest since 2000, driven by AI infrastructure demand.
- These legacy tech stocks are seen as more stable and defensive investments amid economic uncertainties, offering a safer way to play the AI growth story.
- Despite lower growth expectations compared to the broader tech sector, the lower valuation multiples of these companies provide a buffer against macroeconomic risks.