Arista Networks Reports Strong Growth Amid Data Center Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 12 2024
0mins
Should l Buy ANET?
Source: Yahoo Finance
Arista Networks Inc. saw its stock price rise by 3.00%, reaching a 52-week high, reflecting strong investor confidence in the company's performance.
The company has doubled its revenue from $4.38 billion in 2022 to $9 billion in 2025, with GAAP earnings per share increasing from $1.07 to $2.75. This robust growth is driven by a surge in AI spending and the launch of the new R4 series platforms, which enhance performance for AI data centers. Analysts project a 25% sales growth in FY26 and a 20% growth in FY27, indicating sustained demand in the data center sector.
With a strong financial position of $10.7 billion in cash and negligible debt, Arista Networks is well-positioned for future expansion and investment opportunities, further solidifying its leadership in the AI infrastructure market.
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Analyst Views on ANET
Wall Street analysts forecast ANET stock price to rise
10 Analyst Rating
9 Buy
1 Hold
0 Sell
Strong Buy
Current: 172.550
Low
159.00
Averages
172.88
High
200.00
Current: 172.550
Low
159.00
Averages
172.88
High
200.00
About ANET
Arista Networks, Inc. is a provider of data-driven, client-to-cloud networking for large artificial intelligence (AI), data center, campus and routing environments. Its platforms deliver availability, agility, automation, analytics, and security through an advanced network operating stack. Its platform is its Extensible Operating System (EOS), a modernized publish-subscribe state-sharing networking operating system. Its portfolio of products, services and technologies is grouped into various categories: Core (Data Center, Cloud and AI Networking), Cognitive Adjacencies (Campus and Routing), and Cognitive Network (Software and Services). It offers product portfolios of data-driven, high-speed, cloud and data center Ethernet switches. Its Cognitive Adjacencies include Cognitive Campus Switching, Cloud-Grade Routing and WAN Routing. Its software and services are based on subscription-based models and include various offerings: CloudVision, Arista A-Care Services, CloudEOS and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Surge in Market Demand: Intel's latest earnings report reveals a significant increase in demand for central processing units (CPUs), leading to a more than 12% surge in AMD's stock on Friday, reflecting the urgent market need for AI capability development and indicating a revival of the CPU market as a foundation of the AI era.
- Analyst Rating Upgrades: D.A. Davidson analyst Gil Luria upgraded AMD from neutral to buy and raised revenue and gross margin expectations for 2026, increasing the price target to $375, which implies a 22% upside from Thursday's close, demonstrating confidence in AMD's future growth potential.
- Optimistic Intel Guidance: Intel's stronger-than-expected guidance for Q2 anticipates double-digit growth in server CPU shipments by 2026, a significant increase from previous expectations of only slight growth six months ago, further fueling market optimism for CPU manufacturers.
- Changing Competitive Landscape: Analysts generally believe that AMD's position in the market will strengthen with the growth of AI infrastructure demand, although Barclays' Tom O'Malley cautioned that Intel may lose market share to AMD, highlighting the intensifying competition within the industry.
See More
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- AI Infrastructure Beneficiary: Arista Networks plays a crucial role in the global AI buildout, generating over $9 billion in FY2025 revenue and exceeding $1 billion in net income in Q4, highlighting its significance in modern data centers and AI training clusters.
- Customer Relationships Drive Growth: Deep relationships with hyperscale customers like Microsoft, Meta, Amazon, and Google are driving over $500 billion in capex commitments for 2026, directly fueling demand for Arista's 800G and upcoming 1.6T switching platforms.
- Strong Financial Performance: The company boasts operating margins near 48% and net margins above 40%, with free cash flow conversion exceeding 50%, demonstrating exceptional capital efficiency and sustainable growth potential.
- Stock Valuation and Future Outlook: With a current stock price around $143, reflecting fair to slightly rich valuation, EPS is projected to reach $5-6 by 2028, supporting a target price of $175, making accumulation attractive in the $115-125 range.
See More
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- Earnings Expectations: Analysts expect ANET to report in line with consensus but guide above consensus for the June quarter, driven by anticipated strengthening orders from its largest customer, Azure, which could enhance overall performance.
- Revenue Outlook Upgrade: The revenue outlook for 2026 is expected to be revised upward to over 25% growth, up from the current 25% guidance, with consensus already modeling approximately 27% growth, indicating strong confidence in ANET's future growth trajectory.
- Gross Margin Trends: Analysts noted that ANET's gross margin is expected to trend toward 63-64%, approaching the high end of the 62-64% guidance range, reflecting ongoing improvements in cost management and profitability.
See More
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- M&A Activity on the Rise: Roofing and construction supplies distributor QXO has agreed to acquire installation firm TopBuild for $17 billion, positioning QXO as a leader in waterproofing and insulation, which is expected to significantly enhance its market share.
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See More
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- TSMC Profit Surge: TSMC reported a 58% year-over-year profit increase, despite facing challenges with shortages of industrial gases; management noted a 'little bit softer' memory pricing, indicating ongoing demand and competitive pressures in advanced chip manufacturing that could impact future profitability.
- J.B. Hunt Transport Services: J.B. Hunt indicated the start of a new cycle with positive demand signals, reporting a first-quarter earnings beat and a 1% premarket share increase, reflecting potential growth opportunities in the transportation sector.
- Analyst Rating Changes: JPMorgan downgraded Corning to hold and cut its price target from $175 to $115, citing the need for greater earnings visibility to support stock upside, indicating a cautious market outlook on the company's future performance.
See More
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- Market Demand Analysis: According to BNP Paribas, companies like Arista Networks, Fabrinet, and Ciena are favored by investors due to the shortage of AI data center components, particularly memory integrated circuits and optical hardware, indicating strong market demand and investment potential.
- Revenue Forecast Upgrade: BNP Paribas expects the total addressable market for data center switches and transceivers to exceed $140 billion by 2028, reflecting ongoing demand growth for networking hardware, especially in the AI infrastructure sector.
- Price Trend Predictions: Analysis indicates that DRAM contract average selling prices are expected to rise by 90% quarter-over-quarter in CQ1 and 24% in CQ2, primarily driven by a significant increase in AI server demand, highlighting robust market demand for memory products.
- HDD Market Dynamics: Seagate anticipates that the adoption of 40TB HAMR technology in the second half of 2026 will drive its margin expansion beyond peers, indicating that HDD supply and demand dynamics will remain stable in the future, further solidifying its market position.
See More
