F5 (FFIV) is in the early stages of a multi-quarter hardware "refresh plus" cycle, amplified by rising artificial intelligence workloads, RBC Capital Markets said Monday in a note.

The roughly 100 customers using F5 for AI use cases likely include hyperscalers and large enterprises with on-premises GPU infrastructure. However, RBC believes the opportunity will expand as inference shifts to the edge and into private clouds, according to the note.

Model endpoints, API gateways serving inference traffic, and agentic workflows are becoming vulnerable to cyber attacks. F5 has the capacity to offer traffic inspection and policy enforcement as enterprises deploy LLM-powered applications, the brokerage said.

Beyond the hardware refresh, RBC said Software revenue could increase in 2027 as a larger base of 3-year term deals comes up for renewal. At that point, the hardware refresh and software renewal tailwinds are expected to overlap, it added.

F5's analyst day on May 28 could serve as a catalyst for bringing in new investors that were unfamiliar with its evolving thesis, the brokerage said.

RBC kept an outperform rating on F5 and raised the price target to $425 from $375.

Price: 382.75, Change: +3.01, Percent Change: +0.79