Cisco Systems (NASDAQ: CSCO) and Zscaler (NASDAQ: ZS) are both providers of cloud security, though Cisco's roots are in networking platforms. Over the last few years, the shift toward cloud computing has affected these two tech companies differently, and their stocks have moved in opposite directions. Since 2018, Zscaler has surged over 1,200%, while shares of Cisco are down roughly 2%. But where should investors put their money today -- value or growth?
Cisco is perhaps best known for its core networking business, which includes hardware (switches, routers, and wireless access points) alongside embedded software solutions that help clients manage networks in data center and enterprise (campus) environments.
In recent years, cloud computing has reduced demand for on-premise hardware. As a result, Cisco has pivoted toward software and subscription-based products, and in the company's fourth quarter of fiscal 2020, management reported that subscriptions accounted for 78% of total software revenue. If this trend continues, it should help stabilize Cisco's top line, which tends to fluctuate due to the cyclical nature of networking hardware sales.
Source Fool.com