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Arista Networks (ANET) Surges 9.4%: Is This an Indication of Further Gains?

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Arista Networks (ANET - Free Report) shares ended the last trading session 9.4% higher at $76. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 12.2% loss over the past four weeks.

Arista continues to benefit from the expanding cloud networking market, which is driven by the strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance along with programmability that enables integration with third-party applications for network management, automation and orchestration. Arista recently launched new features designed to significantly improve the performance and efficiency of AI clusters. The newly launched Cluster Load Balancing in the Arista Extensible Operating System optimizes AI workload performance through consistent, low-latency network flows. At the same time, the Arista CloudVision Universal Network Observability enhances troubleshooting. Such a comprehensive portfolio augurs well for its long-term growth. In addition to these elements, the U.S. Government’s recent decision to suspend higher tariffs for most countries for 90 days, except China, has raised investors’ confidence. These factors are likely to have propelled the share price appreciation.

This cloud networking company is expected to post quarterly earnings of $0.60 per share in its upcoming report, which represents a year-over-year change of +20%. Revenues are expected to be $1.96 billion, up 24.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Arista Networks, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ANET going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Arista Networks is a member of the Zacks Internet - Software industry. One other stock in the same industry, Workday (WDAY - Free Report) , finished the last trading session 10% higher at $231.42. WDAY has returned -13.4% over the past month.

Workday's consensus EPS estimate for the upcoming report has changed +1.1% over the past month to $1.99. Compared to the company's year-ago EPS, this represents a change of +14.4%. Workday currently boasts a Zacks Rank of #3 (Hold).


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