Cisco (NASDAQ:CSCO) finds itself back in the headlines over competitive fears from a new rival, Amazon (NASDAQ:AMZN) as the reactions from Amazon’s retail moves have re-emerged in the networking world. Even though it’s likely a short-term fix, it means some potentially interesting opportunities for Cisco stock.

Cloud computing has changed, and it needs deeper integration with networking.

Because Amazon may be acting out of necessity rather than aggression, investors should view any short-term negative effects on Cisco stock as a buying opportunity, not as a threat to Cisco’s ability to prosper.

Amazon Moves and Cisco

At first glance, a threat from Amazon might appear to make little sense. Amazon got its start in online retail. Most news headlines about Amazon still revolve around retail.

However, all of Amazon’s 2017 operating profit came from AWS, the company’s cloud computing platform. Hence, an “Amazon will take over networking” narrative may make more sense than the fear that they would dominate retail.

Such a move focuses attention on Cisco stock. Cisco was the darling of the 1990s tech boom. It briefly held the world’s largest market cap in 2000 before losing 90% of its value and most of its media attention. Today, it has become what my colleague Dana Blankenhorn describes as a “boring, but beautiful” tech company.

These companies bear more things in common than meet the eye. Both already compete in the cloud. I also speculated in a previous article that AMZN could follow in the footsteps of Cisco stock achieves a world’s largest market cap status. This theory becomes all the more interesting with Amazon entering into Cisco’s market.

Playing Catch-up With Cisco

However, Wall Street should not view Amazon’s entrance into this market as a “takeover” story. Amazon did not take over retail, and it will not dominate networking either. Instead, I believe investors should see this as a reactive rather than proactive move.

Unified communications (UC) is driving networking and cloud computing towards integration. This has built a UC industry where Cisco, as well as companies such as Microsoft (NASDAQ:MSFT), Verizon (NYSE:VZ), and Plantronics (NYSE:PLT), serve as the main rivals. Hence, Amazon needs a networking presence to contend with its peers.

How well Amazon competes with Cisco remains unknown. Still, investors should view a move into networking as more of an extension of Amazon’s cloud platform. Amazon became a first mover in ecommerce and cloud computing. In the networking world, Cisco and other rivals enjoy a huge head start.

Moreover, large companies rarely rely on one cloud service. That fact will make it more likely companies stay with a networking company such as Cisco for the networking aspects of UC.

Fear of Amazon Makes Cisco Stock a Bigger Bargain

For these reasons, those interested in Cisco now find themselves with an unexpected buying opportunity. Cisco trades at a forward price-to-earnings (PE) ratio of 14.4. Analysts also expect Cisco’s profits to grow by an estimated 9.52% per year over the next five years.

Prospective buyers should also consider the dividend. CSCO stock pays a dividend that yields just over 3.1%. Since initiating its dividend in 2011, the company has increased the dividend every year.

Eight straight years of increases fall well short of the 25 needed for dividend aristocrat status. Still, such a record makes them more dependent on annual dividend hikes. Hence, I would assume that such increases will continue in future years.

The Bottom Line on Cisco Stock

Investors should view any decline in Cisco due to fear Amazon as a chance to buy at a lower price. Fear of Amazon runs rampant. However, history has shown such fear as overdone. Moreover, the rise of UC has made networking companies and cloud firms more dependent on one another.

Still, the nature of both cloud computing and networking favor Cisco. Given the low valuation and a dividend set for annual increases, Cisco has become an excellent buy for income-oriented investors.

If anything, prospective buyers should hope for more Amazon-driven anxiety so they can receive a lower price and a higher return on a Cisco investment.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.