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Arista Networks ((ANET - Free Report) ) is a networking infrastructure provider that’s expanded rapidly over the past decade alongside cloud computing and the explosion of big data. ANET is now benefitting from the AI revolution.
Microsoft and Meta, the firm’s two biggest clients, rely heavily on Arista Networks for their big data growth and AI dreams. ANET announced in early June a new platform “designed to deliver optimal network performance for the most demanding AI workloads.”
Arista Networks shares have left the Zacks Tech sector, Microsoft, Meta, and tons of other tech titans in the dust over the past decade. The picks-and-shovels big-data and AI stock looks poised to break out to fresh all-time highs soon.
Big Data Goes into Hyperdrive
Arista Networks is a leader in data-driven, client to cloud networking, concentrating on large data center/AI, campus, and routing environments. ANET has more than 8,000+ customers worldwide, including Microsoft ((MSFT - Free Report) ) and Meta ((META - Free Report) ). The company said last year that the “cloud titans” accounted for 46% of revenue. Wall Street views ANET’s growing relationship with Microsoft and Meta as a long-term vote of confidence in Arista Networks.
Arista Networks’ offerings are essential and at the cutting edge of big data. ANET played a critical role in the massive expansion of cloud computing over the past decade, as big data turned into one of the backbones of the global economy.
Image Source: Zacks Investment Research
ANET sales soared from $361 million in 2013 to $5.86 billion last year. Cloud computing spending is not something tech firms can easily cut back on. Better yet, the rapid expansion of AI and the race to dominate the space is leading to booming capex spending on data centers.
Arista Networks on June 5 announced what it calls Etherlink AI platforms, aiming to deliver optimized network performance for large AI clusters, including the most demanding workloads such as training and inferencing. ANET’s most recent AI-focused updates came roughly a week after it announced a “technology demonstration of AI Data Centers in order to align compute and network domains as a single managed AI entity, in collaboration with NVIDIA.”
Arista Networks aims to help achieve a “multi-vendor, interoperable ecosystem that enables control and coordination between AI networking and AI compute infrastructure.”
Image Source: Zacks Investment Research
Generative AI is poised to transform into a $1.3 trillion market by 2032, growing at a compound annual rate of roughly 43%, according to a March 2024 Bloomberg report. Meta, Microsoft, Nvidia ((NVDA - Free Report) ), and other mega-cap tech stocks are set to take a leading role in this growth, benefitting Arista Networks.
Growth Outlook
Arista Networks grew its revenue by an average of 37% in the past three years, including 34% expansion in 2023. ANET is projected to boost its sales by 14% in FY24 and another 15% next year to reach $7.70 billion vs. $5.86 billion in FY23.
The networking infrastructure firm is projected to boost its bottom line by 14% this year and 12% next year. This expected adjusted earnings growth comes after Arista Networks grew its EPS by 52% last year.
Image Source: Zacks Investment Research
Arista Networks boosted its EPS outlook once again when it reported its Q1 results in early May to help it earn a Zacks Rank #1 (Strong Buy) right now. ANET’s recent bottom-line positivity is part of an impressive five-year stretch of upward earnings revision as big data booms.
Plus, the firm grew its GAAP gross margin to 63.7% in the first quarter, up from 59.5% in the prior-year quarter.
Performance, Technical Levels & Valuation
Arista Networks shares soared 1,675% during the last 10 years vs. the Zacks Tech sector’s 270%, blowing away Microsoft’s 960% run and Meta’s 687%. ANET’s huge outperformance continued over the trailing three years, with the stock up 240% vs. Tech’s 15%, MSFT’s 70%, and META’s 51%.
Image Source: Zacks Investment Research
Arista Networks stock has surged 32% YTD. The stock rebounded above its 21-day moving average and it could be ready to break out to fresh highs sooner than later since it is trading solidly below some of its more overbought RSI levels over the last year.
On the valuation side, ANET trades at a 37% discount to its five-year highs at 40.9X forward 12-month earnings. This is hardly cheap, but Wall Street has been paying a premium for Arista Networks for years.
Bottom Line
Arista Networks has an impressive balance sheet, with $5.4 billion in cash and equivalents vs. zero debt. The company in early May authorized a $1.2 billion stock repurchase program after completing its previous $2 billion buyback plan. ANET might be worth buying as a big data, cloud computing, and AI investment.
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Bull of the Day: Arista Networks (ANET)
Arista Networks ((ANET - Free Report) ) is a networking infrastructure provider that’s expanded rapidly over the past decade alongside cloud computing and the explosion of big data. ANET is now benefitting from the AI revolution.
Microsoft and Meta, the firm’s two biggest clients, rely heavily on Arista Networks for their big data growth and AI dreams. ANET announced in early June a new platform “designed to deliver optimal network performance for the most demanding AI workloads.”
Arista Networks shares have left the Zacks Tech sector, Microsoft, Meta, and tons of other tech titans in the dust over the past decade. The picks-and-shovels big-data and AI stock looks poised to break out to fresh all-time highs soon.
Big Data Goes into Hyperdrive
Arista Networks is a leader in data-driven, client to cloud networking, concentrating on large data center/AI, campus, and routing environments. ANET has more than 8,000+ customers worldwide, including Microsoft ((MSFT - Free Report) ) and Meta ((META - Free Report) ). The company said last year that the “cloud titans” accounted for 46% of revenue. Wall Street views ANET’s growing relationship with Microsoft and Meta as a long-term vote of confidence in Arista Networks.
Arista Networks’ offerings are essential and at the cutting edge of big data. ANET played a critical role in the massive expansion of cloud computing over the past decade, as big data turned into one of the backbones of the global economy.
Image Source: Zacks Investment Research
ANET sales soared from $361 million in 2013 to $5.86 billion last year. Cloud computing spending is not something tech firms can easily cut back on. Better yet, the rapid expansion of AI and the race to dominate the space is leading to booming capex spending on data centers.
Arista Networks on June 5 announced what it calls Etherlink AI platforms, aiming to deliver optimized network performance for large AI clusters, including the most demanding workloads such as training and inferencing. ANET’s most recent AI-focused updates came roughly a week after it announced a “technology demonstration of AI Data Centers in order to align compute and network domains as a single managed AI entity, in collaboration with NVIDIA.”
Arista Networks aims to help achieve a “multi-vendor, interoperable ecosystem that enables control and coordination between AI networking and AI compute infrastructure.”
Image Source: Zacks Investment Research
Generative AI is poised to transform into a $1.3 trillion market by 2032, growing at a compound annual rate of roughly 43%, according to a March 2024 Bloomberg report. Meta, Microsoft, Nvidia ((NVDA - Free Report) ), and other mega-cap tech stocks are set to take a leading role in this growth, benefitting Arista Networks.
Growth Outlook
Arista Networks grew its revenue by an average of 37% in the past three years, including 34% expansion in 2023. ANET is projected to boost its sales by 14% in FY24 and another 15% next year to reach $7.70 billion vs. $5.86 billion in FY23.
The networking infrastructure firm is projected to boost its bottom line by 14% this year and 12% next year. This expected adjusted earnings growth comes after Arista Networks grew its EPS by 52% last year.
Image Source: Zacks Investment Research
Arista Networks boosted its EPS outlook once again when it reported its Q1 results in early May to help it earn a Zacks Rank #1 (Strong Buy) right now. ANET’s recent bottom-line positivity is part of an impressive five-year stretch of upward earnings revision as big data booms.
Plus, the firm grew its GAAP gross margin to 63.7% in the first quarter, up from 59.5% in the prior-year quarter.
Performance, Technical Levels & Valuation
Arista Networks shares soared 1,675% during the last 10 years vs. the Zacks Tech sector’s 270%, blowing away Microsoft’s 960% run and Meta’s 687%. ANET’s huge outperformance continued over the trailing three years, with the stock up 240% vs. Tech’s 15%, MSFT’s 70%, and META’s 51%.
Image Source: Zacks Investment Research
Arista Networks stock has surged 32% YTD. The stock rebounded above its 21-day moving average and it could be ready to break out to fresh highs sooner than later since it is trading solidly below some of its more overbought RSI levels over the last year.
On the valuation side, ANET trades at a 37% discount to its five-year highs at 40.9X forward 12-month earnings. This is hardly cheap, but Wall Street has been paying a premium for Arista Networks for years.
Bottom Line
Arista Networks has an impressive balance sheet, with $5.4 billion in cash and equivalents vs. zero debt. The company in early May authorized a $1.2 billion stock repurchase program after completing its previous $2 billion buyback plan. ANET might be worth buying as a big data, cloud computing, and AI investment.